Contracts – offers and acceptance and Carlill
In negotiating a contract statements are made by the parties.
One type of statement may be an offer, that is, a statement that
the offeror intends to be bound by a promise, if the offer is
accepted by the other party. Offers must be communicated
before an acceptance can occur. See reward cases.
If made to a specific person only that person may accept. If
made to the world, anyone can accept.
Another type of statement is an invitation to treat. That is, an
invitation to the other party to make an offer. The latter
includes catalogues, priced items on shelves etc. These are not
offers, rather invitations to others to make an offer. If the U of
L calls for tenders by construction companies to build a
Faculty of Management building, they are inviting the
construction companies to make an offer. If four separate
offers are made, the U of L is free to choose one of the offers or
reject all of them.
Advertisers that make “offers” in a newspaper, magazines, or
on TV are not normally found in law to be making an offer.
The law views such advertisers as making an invitation to
potential customers to offer to buy the advertised product.
When supermarkets stack their shelves with “offers” to
potential customers, they are again inviting the potential
customers to make an offer to buy the products. The
supermarket will then most likely accept the offer to buy, but is
free not to accept the offer.
While advertisements are usually treated as an invitation to do
business not an offer, the case Carlill v. Carbolic Smoke Ball
Company illustrates that an advertisement can on occasion be
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treated by law as an offer and lead to a binding contract if
accepted by someone from the group to whom the offer is
made. An offer can be made to an individual, in which only the
individual can accept. If the offer is made to a group, for
example, members of a golf club, then only members of the golf
club can accept. If the offer is made to the whole world, then
anyone can accept it. However, one is not legally bound to
accept an offer.
An exception to the rule that an advertisement is not an offer
but only an invitation to the other person(s) to make an offer is
evident in the 1893 English case of Carlill v. Carbolic Smoke
Ball Company.
Lindley J. The first observation I will make is that we are not
dealing with any inference of fact. We are dealing with an
express promise to pay 100 pounds in certain events. Read the
advertisement how you will, and twist it about as you will, here
is a distinct promise expressed in language which is perfectly
unmistakable - "100 pounds reward will be paid by the
Carbolic Smoke Ball Company to any person who contracts
the influenza after having used the ball three times daily for
two weeks according to the printed directions supplied with
each ball."
We must first consider whether this was intended to be a
promise at all, or whether it was a mere puff which meant
nothing. Was it a mere puff? My answer to that question is No,
and I base my answer upon this passage: "1000 pounds is
deposited with the Alliance Bank, shewing our sincerity in the
matter." Now, for what was that money deposited or that
statement made except to negative the suggestion that this was
a mere puff and meant nothing at all? The deposit is called in
aid by the advertiser as proof of his sincerity in the matter that is, the sincerity of his promise to pay this 100 pounds in
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the event which he has specified. I say this for the purpose of
giving point to the observation that we are not inferring a
promise; there is the promise, as plain as words can make it.
Then it is contended that it is not binding. In the first place, it
is said that it is not made with anybody in particular. Now that
point is common to the words of this advertisement and to the
words of all other advertisements offering rewards. They are
offers to anybody who performs the conditions named in the
advertisement, and anybody who does perform the condition
accepts the offer. In point of law this advertisement is an offer
to pay 100 pounds to anybody who will perform these
conditions, and the performance of the conditions is the
acceptance of the offer. That rests upon a string of authorities,
the earliest of which is Williams v. Carwardine 4 B. Ad. 621,
which has been followed by many other decisions upon
advertisements offering rewards. Accordingly, if a person
advertises to the a reward for finding and returning a lost dog,
that is in law an offer that can be accepted by anyone, by the
safe return of the dog. In this case acceptance of the offer is by
conduct. The conduct of returning the dog to the owner.
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