The Carbolic Smoke Ball Company made a product that it claimed could protect the user from contracting influenza. The Company published advertisements claiming that it would pay £100 to anyone who got sick with influenza after using its product according to the instructions set out in the advertisement.
Specifically, they stated:
£100 reward will be paid by the Carbolic Smoke Ball Company to any person who contracts the increasing epidemic influenza, colds or any disease caused by taking cold, after having used the ball three times daily for two weeks according to the printed directions supplied each ball. £1000 is deposited with the Alliance Bank, Regent Street, shewing our sincerity in the matter. Mrs Carlill, relying on the promises made in the advertisement, bought one of the balls and used it in the manner specified, yet still managed to contract influenza.
The Carbolic Company claimed that there was no enforceable contract between it and the user of the smoke ball on the grounds that there was no acceptance of its offer, because Mrs Carlill had never notified the Company that she accepted its offer, or consideration, since the Company did not receive any benefit from a purchaser's use of the product once the sale had been completed. The court rejected both arguments, ruling that the advertisement was an offer of a unilateral contract between the Carbolic Smoke Ball Company and anyone who satisfies the conditions set out in the advertisement. Once Mrs Carlill had satisfied the conditions she was entitled to enforcement of the contract; the notification of performance of the conditions formed part of the acceptance. Furthermore, weight was placed on the £1000 bank deposit that claimed to 'show their sincerity in the matter' in showing that the advertisement was not just a puff.
The case was quoted extensively in the famous "Pepsi Points case", Leonard v. Pepsico, Inc., 88 F.Supp.2d 116...