The Carbolic Smoke Ball Co - Essay Example

Ahmed owned three dogs that had been trained to pull a cart in a market carrying dry vegetables. One night they escaped from Ahmed's house and he placed an advertisement in a local periodic magazine. This advertisement contained a description of the dogs and a promise to pay 500 for each dog to anyone who restored the dogs to him. Susan, Ahmed's neighbour, searched diligently for the dogs for two days. She incurred an expenditure of 20 towards transportation, while travelling to different part of the city. Susan found one of the dogs. However, she took the dog to her house and did not restore to Ahmed immediately. Jose found the carcass of the second dog, which had been killed subsequent to being run over by a car. Jose took the carcass to Ahmed who refused to pay for the carcass. Fatima, Ahmed's sister, found the third dog and gave it to Ahmed, who refused to pay her anything whatsoever. Since, one of the dogs was dead and as two dogs would be unable to pull the cart, Ahmed placed posters around the city cancelling the promise of a reward. Susan not noticing the leaflets of revocation returned the dog she found to Ahmed, who refused to pay her anything. The relevant legal position in this respect is that unilateral contracts are one-sided contracts where someone makes a promise in return for an act. In Balfour v. Balfour there was no intention, hence there was no contract though they lived together1; further, in Merritt v. Merritt there was no intention and the parties were not living together, hence, there was no valid contract2. In Carlill v Carbolic Smoke Ball Co it was decided that performance of the required act constitutes acceptance3. An offer can be revoked before the act is performed. The facts of this case are that The Carbolic Smoke Ball Co placed an advertisement in a newspaper, which stated that a 100 reward would be paid by it to any person getting infected by influenza, colds or any disease resulting from the common cold. After having used the ball three times daily for two weeks according to the printed directions supplied with each ball, an amount of 1000 would be deposited with the Alliance Bank, Regent Street. Mrs Carlill bought the ball and duly caught flu. The company refused to pay, stating that it was not an offer, but a mere advertising publicity stunt. The Court held that the advertisement was a genuine offer, which could be accepted by using the Smokeball and catching flu. Intention was demonstrated by the deposition of money in the bank4. However, if the offeree has commenced performance of the act then the offer cannot be revoked without providing a reasonable opportunity to complete the offeror's requirements. In Abbott v Lance it was held that acceptance must rely upon the offer5. The Cases Williams v Carwardine6 and R v Clarke7, also illustrate this point. The advertisement indicated the promisor's intention to commit himself legally. Susan incurred expenditure and expended her valuable time in searching for these dogs. The first issue to be determined is the effect of Ahmed's advertisement. The decision in Carlill v Carbolic Smokeball Company was that the offer of a unilateral contract can be made by an advertisement and to revoke it the offeror must use a method of communication, which reaches most if not all of the people who had viewed this offer8. The law generally insists on identifying an offer and acceptance as the basis for the existence of a contract. An offer indicates the terms on which an offeror intends to be bound. Offers must be distinguished from invitations to treat or deal, negotiations and auctions. Offers can be made to individuals, a number or class of people or to the world at large. An offer to the world at large usually takes place in reward contracts which are a major application of the concept of unilateral contracts. An offer can be terminated by rejection, counter offers, revocation - unless required conduct has begun - , lapse of a reasonable period of time or in the event of death of the offeror. To prevent revocation of an offer, an option can be secured by a separate contract to make the offer irrevocable for a specified period of time. In Errington v Errington and Woods the Court decided that a unilateral offer could not be withdrawn once performance had commenced, even though there would be no binding contract if the performance was left incomplete9. Request and intention in a contract are concerned with promises that are to be regarded as contractual. A contractual promise is one that is made with the intention of entering into a legally binding contract. For a valid contract, the parties must enter the agreement with the intention that the agreement should have legal consequences. Intention is determined by applying the objective test which endeavours to determine whether a reasonable person would enter the agreement with the intention that it should be legally binding. It is essential to examine the nature of the relationship to deduce intention. It is essential to scrutinize the intention of the promisor. A contract requires the existence of an intention. Acceptance must be communicated and the offeror is entitled to know whether the offer made has been accepted, acceptance is effectively communicated when it comes to the attention of offeror. There is no contract until communication is effected and the offeror can revoke the offer up to the time of communication of acceptance. In Felthouse v Bindley it was held that in contracts it is not enough to assent inwardly. The acceptance must be communicated to the offeror or someone authorized by him to receive it or by the appointed agent. Acceptance must be communicated for two persons to agree10. The offeror may waive requirement for communication of acceptance since this is solely to the offeror's benefit. Waiver of a communication of acceptance can be done either expressly11 or by implication12.However, in unilateral contracts notification of acceptance is impliedly waived because a specific mode is expected and the offeror can stipulate an exclusive mode of acceptance. However, the offeror cannot make it impossible to accept a waiver of requirement as in Carlill v. Carbolic Smokeball. In Eliason v Henshaw no contract was found to exist as the defendant had delivered acceptance to a place other than that stated in the offer. "An offer of a bargain by one person to another, imposes no obligation upon the former, until it is accepted by the latter, according to the terms in which the offer was made. Any qualification of, or departure from, those terms, invalidates the offer, unless the same be agreed to by the person who made it. Until the terms of the agreement have received the assent of both parties, the negotiation is open, and imposes no obligation upon either." 13 Where there is an exclusive mode of acceptance set by the offeror any deviation from that mode invalidates the offer, unless the qualifications are agreed upon by the offeror. In Carmichael v Bank of Montreal it was held that an offeror who sets conditions regarding exclusive modes if acceptance and deadlines cannot do so in a manner which makes acceptance impossible14. Susan had kept the dog in her house for some time instead of handing it over to Ahmed as any reasonable person would have done under similar circumstances. Prior to handing over the dog to Ahmed, revocation notice had been displayed by him. Therefore, this Susan is not eligible for any reward. In Re Reitzel and Rej-CapManufacturing Ltd, it was decided that an offer is revoked by necessary implication if there is destruction of the subject matter of the proposed contract prior to acceptance while the offer is open. In cases involving destruction of the subject matter, the doctrine of frustration comes into play and will serve to render the contract void. The advertisement to find the dogs implies that the dogs have to be retuned to the owner alive. A contract is void if there is occurrence of any event which is inconsistent with the continuation of offer or change of circumstances which makes it impossible to accept offer. Hence, the production of the dead dog by Jose in order to get the reward does not constitute a valid contract and so he in not eligible for any reward as the dead dog does not serve the purposes of the owner. In respect of Fatima, Ahmed's sister, Ahmed is not legally bound to give Fatima the reward, because he had already given a notice that he did not require these dogs and further, because there can be no legally binding contracts between members of the same family. This is in accordance with the judgement in Balfour v. Balfour, where it was held that there is a presumption against intention to create legal relations between members of the same family15. In this manner Ahmed need not pay the reward to any of the three offerees. Bibliography. 1. Hillman A. Robert. Principles of Contract Law. 2004. 2. Halsbury's Laws of England, 4th Edition. 3. Jack E. Beatson and Daniel E. Friedmann (eds). Good Faith and Fault in Contract Law. Clarendon Press. Oxford. 1997. 4. Joseph M. Perillo and John D. Calamari. Calamari and Perillo on Contracts. August 2003. 5. Marvin A. Chirelstein. Concepts and Case Analysis in the Law of Contracts. May 2001. 6. Melvin Aron Eisenberg. Gilbert Law Summaries: Contracts, 2002. 7. Peter Kincaid. Privity: Private Justice or Public Regulation. 1st March 2001. 8. Phyllis H. Frey and Martin A. Frey. Essentials of Contract Law. 9. A.W.B. Simpson. A History of the Common Law of Contract: The Rise of the Action of Assumpsit. Oxford University Press. Oxford, England. 1987. 10. Thomas D. Crandall and Douglas J. Whaley. Cases, Problems and Materials on Contracts. March 2004. Read More