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Carlill v Carbolic Smoke Ball Co 1893

Unilateral Contracts

A unilateral contract is one in which one party has obligations but the other does not. Unilateral contracts sometimes occur in sport in circumstances where a reward is involved. Party A offers a reward to Party B if they achieve a particular aim. If Party B is successful they get the reward but if they unsuccessful they receive no reward and equally they have no obligation to Party A.

Legal principles about unilateral contracts arose from the case of Carlill v Carbolic Smoke Ball Co. 1893.

The Carbolic Smoke Ball Company, during an influenza epidemic, placed an advertisement indicating that they promised to pay £100 to anyone (hence a unilateral contract) who caught influenza after using their ball as indicated for two weeks. They had deposited £1000 in a bank account as a gesture of good faith.

Mrs Carlill purchased the ball, used it as directed, but caught influeza and sued the Carbolic Smoke Ball Co. who then refused to pay.

The court awarded Mrs Carlill damages of £100.

Points of Law:

1. A suggestion that the offer was too vague to form the basis for a binding agreement, in that it had no time limit, was rejected by the court, which felt that the ball must have been intended to protect its user during the two week prescribed period of use.
2. The court viewed the deposit of the £1000 as evidence of an intention to pay any claims and therefore rejected the notion that the offer was simply an advertising gimmick.
3. The proposal that it is impossible to make an offer to the world at large was also rejected; the contract that arises from such an offer will be unilateral.
4. The use of the product was deemed sufficient consideration.
5. Communication of acceptance, in unilateral contract of this kind, may be made by conduct.

So, if a person offers a reward to anyone who achieves a certain objective as desired by the offerer, then it is probable that who ever makes the offer will have to pay to persons who are successful.