What Makes a Contract Valid ?
A Leading Case – The Carbolic Smoke Ball
Much of the law as to what defines an enforceable contract was established in what we call a leading case. It concerns a quaint piece of 19th Century quackery which was offered to the market, foolishly with a reward to anyone who it didn’t work for. Lawyers across the common law world remember it from their uni days, and its well worth studying.
Carlill v Carbolic Smoke Ball Co is a 19th Century case revolving around a certain quack medicine belief. Mrs Carlill bought a medicinal product called a carbolic smoke ball – a piece of rubber intended to be burned, while the user inhales the smoke. She used it as stipulated, on the promise in the advertisement that it would prevent colds, influenza and similar. In spite of following directions she contracted influenza in spite of the treatment.
Mrs Carlill claimed her £100 reward, but the company refused, claiming it was only an advertisement. She sued and took the appeal as far as the House of Lords (equivalent to the High Court – which was affordable in those days). Mrs Carlill won the appeal....
The court reasoned that the company had crossed the line between a mere invitation to treat and an offer of a contract by stating in the advertisement that they had put £1000 on deposit to show their sincerity.
The company’s offer to the world at large was as valid as an offer to one individual at a time. This type of contract is a unilateral contract. As it was unilateral, Mrs Carlill was not required to give the company notice of her acceptance of their offer; therefore performance of the terms of contract was sufficient to show her acceptance.
It was a valid question to ask how long was the smoke ball was meant to protect the user. The court ruled that this is to be whatever is reasonably to be expected – judged on common, sensible expectations. The principle of reasonableness pervades jurisprudence and is very important to remember.
To gain a judgment in her favour Mrs Carlill needed to have a valid contract in which she had provided consideration of some sort on her part. The contract of sale had been completed so she could not rely on that; neither was there any consumer protection law to assist her. The court ruled that her use of the smoke ball constituted a cost or effort on her part as offeree, as consideration in return for the offer made on the label to those who used the product.
 Carlill v Carbolic Smoke Ball Co  1 QB 256.