What is a unilateral contract? It is an enforceable contract created by an offer that can only be accepted by performance. In unilateral contracts, communication of acceptance is not expected or necessary. Therefore, if there is an offer to the world at large, and that offer does not expressly or impliedly require notification of performance, then performance of the specified condition in the offer will constitute acceptance of the offer and consideration for the promise.
In Carlill v Carbolic Smoke Ball Co, statements that were made in an advertisement may be a mere “puff” and not intended to be legally binding but if the advertisement shows a clear promissory intention to be legally bound, it may constitute a unilateral offer.
Facts
• Carbolic Smoke Ball Co (Defendant) promises in the advertisement to pay 100 pounds to any person who contracts flu after using their smoke ball.• Mrs Carlill (plaintiff) used the ball but contracts flu and claims to have relied on the said advertisement.
The issue at hand was whether there was a legally binding contract between the parties?
A valid and enforceable contract requires notification of acceptance. Did Mrs Carlill notify Carbolic of the acceptance of the offer? And thereon, did Mrs Carlill provide any consideration in exchange for the 100 pounds reward?
The Defendant argued that there was no binding contract as the words of the advertisement did not amount to a promise as the advertisement was too vague to constitute a valid and binding contract. Further, there was no limit as to the length of time and also no way of checking the actual use of the smoke ball by consumers. The Defendant further argued that the terms were too vague to make a valid contract as there was no limit as to time was clearly stated. This would mean that a person might claim they had contracted flu 10 years after using the remedy.
The Defendant also claimed that there was no contract concluded as a contract requires communication of intention to accept the offer or performance of some overt act.
The Plaintiff’s argument is that the said advertisement was an offer that they were under an obligation to fulfill because it was published so it would be read and acted upon and it was not an empty boast. As such, the promise was not vague and that there was consideration.
Held
There was a binding contract. The advertisement was an express promise – to pay 100 pounds to anyone who contracts flu after using the ball three times daily x 2 weeks. The advertisement was not a mere puff, because of the statement “1000 pounds is deposited with the Alliance Bank, shewing our sincerity in the matter” – as proof of the defendant's sincerity to pay.• A promise is binding even though not made to anyone in particular – a unilateral offer – ie. “offers to anybody who performs the conditions named in the advertisement, and anybody who does perform the condition accepts the offer”.
• The advertisement is not so vague that it cannot be construed as a promise – the words can be reasonably construed. For example, that if you use the remedy for two weeks, you will not contract the flu within a reasonable time after that.
• Notification of acceptance – notification of the acceptance need not precede the performance – “this offer is a continuing offer”.
o “If notice of acceptance is required, the person who makes the offer gets the notice of acceptance
contemporaneously with the notice of the performance of the condition”.
o Ie. when there is an offer to the world at large, acceptance is legally valid when the offeree communicates
to the offeror notice of performance of the specified conditions. This means acceptance is not legally valid
when notification of the performance of the specified conditions does not occur.
Consideration
There was consideration in this case for two reasons:1. Carbolic received a benefit ie. in the sales directly beneficial to them by advertising the Carbolic Smoke Ball.
2. The direct inconvenience (and detriment) to the person who uses the smoke ball 3 times a day x 2 weeks according to the directions at the request of Carbolic. In other words - performance of the specified conditions constitutes consideration for the promise.
Source : Claire Macken - Sample Case Summary
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