This article is written by Srijita Adak who is pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from Lawsikho.
Table of Contents
Introduction
Indian Contract Act came into force in 1872 by the British based on the existing laws of England. So, the majority of landmark cases of Indian Contract are English cases. Carlil v. Carbolic smoke ball case is such an example. Suppose, a shampoo company advertises that if you use our shampoo & after that hair fall happens, we will give you Rs. 1000. In this case, will someone accept it by writing? The answer to this was given in Carlil v. Carbolic smoke ball case.
Contracts and advertisements are indispensable pieces to maintaining any kind of business. These two parts of a business are consequent yet have significant differences. It’s essential to completely comprehend how promotions and agreements can function hand in hand. An advertisement is distinctive on the grounds that it is anything but an agreement until a potential customer reacts to the ad and afterwards seeks after an agreement.
Usually, advertisements are utilized to captivate clients to make a purchase. Likewise Carbolic smoke ball also gave an advertisement with the intention of attracting more customers. The judgement was given in the favour of the customer, Mrs Carlil. This judgement highlighted the concept of unilateral contracts in advertisements. The significance of this judgement in unilateral contracts in the case of advertisements is immense.
Facts
In this case, Carlil is the plaintiff & Carbolic Smoke Ball which is a company is the defendant. The Company advertises a product which is a carbolic smoke ball and says that if anyone uses that product as per description & after that, he or she contacts Influenza, cold etc. disease then they will give £ 100 to that person.
To show sincerity in their advertisement they said that they deposited £ 1000 in Alliance bank. Carlil used the product as per the description, but he got influenza. So, he claimed the reward from the company.
The company said the ad was very vague as there was no time limit and there was no intention to enter into a legal obligation with the plaintiff. The ad was puffing without seriousness. The offer was not for any particular individual. The plaintiff didn’t communicate his acceptance & also there was no consideration. So, they said they need not give the reward to the plaintiff.
The strongest argument was that generally when one gets an offer, he should accept and communicate the acceptance as well but the plaintiff did not communicate.
The court said that it was not a vague offer but a definite offer as they said while consuming the carbolic smoke ball if anyone contracts a disease like influenza, cold then they will get a reward. So, when they gave the advertisement with a reward that means they wanted people to act on it. It will not be a puffing ad because the company has shown seriousness by depositing £ 1000 in Alliance bank.
The court also said that if any offer contains conditions and someone fulfils those conditions then there is no need for acceptance. The performance of the condition is adequate acceptance without notification. So, in this case, it was said that if you are performing the conditions of any offer, that will be acceptance itself and it is not necessary to communicate the acceptance. The plaintiff, Carlil got his reward of £100.
Unilateral contract
The word ‘uni’ denotes one. A contract where there is a promise from one side just and it requires some performance from the other party is known as a unilateral contract. It is a promise in exchange for specific actions. Advertisement and contracts are different but if an advertisement shows a clean promissory purpose to be legally bound, it can represent a unilateral contract.
Here, one of the issues was with the acceptance and consideration of a valid contract. In this case, the advertisement from the Carbolic smoke ball was not vague or puff. There was a consideration as the company will benefit from their sales of the product and the fact of depositing £ 1000 in Alliance Bank as evidence of sincerity to pay.
Generally, according to section 4 of the Indian Contract Act,1872, communication of acceptance is one of the essentials of a valid offer. But under section 8 of the Indian Contract Act,1872, for unilateral contract there is an exception in which the offeror makes a proposal to the world which may be granted by the performance of few acts. So, in this case, also it was decided that Carlil’s performance of the specific directions (3 times daily for 2 weeks) in the product will determine the acceptance of the offer for the promise. Thus, the advertisement was constituted as a unilateral contract.
Relevant Case laws
Harbhajan Lal v. Harcharan Lal (AIR 1925 All 539)
In the case, Harbhajan Lal v. Harcharan Lal, a young boy of 14 or 15 years old ran from his father’s home. The father of the boy was the defendant in this case. He issued a pamphlet, wherein he stated “Anybody who finds my son and brings him home, I will give him Rs 500 as a reward”. Plaintiff Har Bhajan Lal discovered him at Bareilly Junction railway station from wherein he took the boy to Dharamshala police station and informed the defendant that he had found his son through telegram. But at the time of giving the reward, the father of the boy claimed that he did not receive any acceptance so isn’t entitled to get any reward of the offer.
The Allahabad High Court held that this proposal was made for the world at large. So, anyone can accept this proposal and the performance of the conditions of a proposal is the significance of the acceptance. So, the plaintiff by tracing the boy and sending the telegram perform the conditions of the proposal. Hence, he is entitled to the reward.
Impact of Carli V. Carbolic Smoke Ball judgement
Market strategy
The big companies produce puff advertisements to promote the goods and services and enhance the profits so that they can attract more and more customers. With this, they get a huge amount of benefit in sales. It is part of their marketing strategy. Through this case, every company has to think twice before applying such a marketing strategy.
After this case, companies and marketing organizations are more cautious with what they launch to the world at large. For an inconsiderate advertising approach, many detrimental incidents can happen where the company can be involved in groundless litigation which may harm their reputation and brand value in a particular field.
In one side, this is very unfortunate for the companies as they will not be able to attract more customers. In another side it is beneficial as the unilateral contract will be taken care of seriously. Thus, fake promises through advertisements will be less.
Trade ambiguity
The doctrine of consideration has been a basic feature of a legally binding contract. But the doctrine is used defectively in unilateral contracts. Due to this, ambiguity in trades occurs and traders face a lack of certainty in their contracts.
For instance, the variations of wages are implied terms which leads to trade ambiguity. Similarly, the unilateral contract does not fulfil the criteria of being certain as the conditions of a unilateral contract can be performed by anyone.
Now the question arises that how will the business parties be assured that they are following each and every condition in a commercial agreement? Because some conditions which are implied in nature has a narrow scope. In this manner, there are restricted circumstances in which trade certainty would be disregarded because of the disappointment of non-performance.
Enforceability of Unilateral contracts
In Carlil’s case, if the judgement would come in reverse in the favour of the Carbolic smoke ball company, then the unilateral contracts in the case of advertisement have been now no longer enforceable as debated in this case. Then there might have been no assurance for customers like Mrs Carllil and without which they would never be able to build the trust for buying such products which would automatically lead to loss of those companies.
So, the interest of companies to promote products and reasonable belief to buy those products would negatively affect the consensus of the parties. Thus, the “Reliance Theory” which preserves a party’s reasonable desire could not be followed. So, the establishment of enforceability in unilateral contracts in the case of advertisements helped better the operation of the marketing system in society. Thus, both parties will be benefitted and in equal positions.
Consideration
Consideration is indeed an essential element to a valid contract. A unilateral contract is also not an exception where the consideration plays an important role. When advertisements become unilateral contracts with legal intention, the consideration must be there. Here, one of the issues was with the consideration of a valid contract and the question was whether Mrs Carlil gave consideration or not towards the unilateral contract between the company and Mrs Carlil.
In this case, the advertisement from the Carbolic smoke ball was not vague or puff. There was a consideration as the company will benefit from their sales of the product and the fact of depositing £ 1000 in Alliance Bank as evidence of sincerity to pay. Also, Mrs Carlil gave the consideration by acquiring the harm of getting influenza again or by following the specified instruction of the product.
So, in any advertisement where there is an existence of a unilateral contract now, the companies are more focused on the applicability of the consideration. They are more inclined towards the implication of consideration from both parties.
Future Market
The advertisement has shaped our thoughts in such a way that we are prone to luxury and material comforts. We can see these advertisements everywhere be it roadsides, television, newspaper and even on mobile screens as well.
For example, there are children targeted products and they are more attractive to children than to parents. This psychological approach ensures that the children remain stubborn and the parents are compelled to buy that product. Thus, a future market is set. No wonder this has been continuing for years and being the reason for our luxurious dreams and lives.
In today’s world of globalization where every single thing, even values, relations and passions have been commodified. Advertisements have a major and decisive role to play. Everything that we make use of in our daily life is being advertised. This creates an aura around and makes it the most demanded commodity.
These days with television and other social networking sites, advertisements have been creating new, lucrative and innovative methods to reach more people but advertisements can be a unilateral contract. Advertisements cum this contract have created a consumerist approach to modern life which is actually a trap for a society. To avoid those traps, we have to be aware of our needs and beware of our deeds.
Direct control over advertisement is however not possible but it is the common man who has a crucial role to play in preventing those situations where the consumer feels helpless and betrayed. After this case, every customer must have been aware of their rights and the legal aspect regarding a unilateral contract as well.
USP (Unique Special Proposition) & Tagline
USP of a product plays a crucial role in an advertisement. There are so many similar products with different features. Every product has a USP that differentiates and make a product unique from other products. For e.g.- Maggi’s USP is convenient and Yippe’s USP is spicy and tasty. It is a special appeal that can influence people. This basically helps to reduce competition. It is designed to manipulate the psychological manner of a customer to attract more people.
Likewise, taglines are also used for similar products to show their different attributes. For e.g.- Surf excel’s tagline is ‘Daag acche hai’ and Tide’s tagline is ‘Tide ho to white ho’. But from these many controversial advertisements used to come into the picture. For e.g.- Zomato used MC (Mac & Cheese) & BC (Butter Chicken) for its promotion which apparently seems to be a vulgar word. In another advertisement of Dove, it was told that the colour of the skin will be white from the dark. Does that mean black skin is not good and one person must be fair to look good?
The carbolic smoke ball also had USP that anyone who will get £100 who will get sick with influenza after using that as per instruction (3 times daily for 2 weeks). The whole argument started with this only. So, every advertisement should look into the matter that the advertisement must not give a negative impact on the customers. To ensure this matter, nowadays companies have their research and development centre personalised for USP creation of every product. This helped a lot in creating seriousness of every product’s USP & Tagline.
Goodwill and reputation
When a company launches a new product, advertisement helps in popularising that product and overcoming competition. It reaches different corners of the country very easily. It not only increases the goodwill and reputation of the product but also the reputation of that company. Thus, it contacts the public directly.
There are often differences between the reality and the way that the product has been presented in advertisements because all the information given by advertisement may not be 100% accurate at times. For example, advertisement of fast food focuses on fun, family and appealing food, cigarette advertisements target people with manipulative techniques which omit the truth.
The false image of the product creates absurd expectations in the mind of customers which is difficult to acquire and those misleading advertisements induce people to buy things of bad quality which puts them at a big loss. But when the reality of the product comes out the reputation of the company falls apart. So, to protect its own goodwill and reputation the companies are more serious about launching a new product. The advertisement has moved towards being more authentic rather than being lucrative.
Social change
Society is the customer of a company where that company sells products and gets the profit. So, a company should not do such things where the emotion or sentiments of society gets hurt. Sometimes companies concentrate on selling their products only and end up hiding the real facts from society to attract more customers. By advertisement cum unilateral contract also people can get harm.
There are a lot of diseases in society which spread like anything and misleading advertisements regarding those can harm society at large. Some advertisements used to be shown in such an effective way that leads to interpret racism, gender equality etc. But after many cases, these misleading advertisements which exploit the emotional attachment of the customer have reduced.
Advertisements of true facts of those diseases and advertisements on launching a campaign on environmental protection are helping to save millions of lives. An example would be the advertisements of the Covid-19 virus. With less lucrative or misleading advertisements, we have seen social changes like women empowerment, girl education, developing public opinion, cleanliness of surroundings etc.
Conclusion
Unilateral contracts are an important part of the contract law, and it is legally valid because it fulfils all of the fundamental standards of contract law, in addition to including consensus. The unilateral contracts appear to be maximum beneficial at some point of industrial use- promoting products like vaccines that guarantees prevention of illnesses, for example, are mainly benefitted with the aid of using the enforceability of unilateral contracts.
It makes transactions easeful and effective. In this contract, not only the proposer gets the advantage but also the acceptor gets the advantage just by acting out his acceptance. The fact of non-requirement of communication of acceptance reduces complexity.
We can conclude that the judgement impacted unilateral contracts in many ways. The enforceability of unilateral contracts in the case of advertisement helped to develop the whole society in order to protect the equal position of buyer and seller.
Also, we face so many absurd advertisements which are not realistic and harm the lives of people in many ways. The enforceability of unilateral contracts in the advertisements certainly paved the way for more legitimate and equitable advertisements.
References
- https://www.lawteacher.net/free-law-essays/contract-law/it-is-necessary-to-enforce-unilateral-contracts-contract-law-essay.php
- https://www.lawkaranconsultancy.in/har-bhajan-lal-vs-har-charan-lal/
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