Contract; formation: consideration; offer and acceptance.
Facts: During an influenza epidemic in England in 1891 the Carbolic Smoke Ball Company produced patented 'smoke balls' made from certain chemicals. The company marketed these smoke balls as an effective means of preventing influenza. In particular, the company published an advertisement in a newspaper, offering to pay a reward of £100 to anyone who purchased the smoke balls, used them according to the instructions provided, but who nevertheless caught influenza. To demonstrate the seriousness of their offer, the company deposited £1000 in a bank account from which to pay the rewards. Elizabeth Carlill saw the advertisement. She bought and used a smoke ball as directed. When she nevertheless caught influenza she claimed the £100 reward promised by the company. The company refused to pay her, denying that an enforceable contract with Carlill had been created in these circumstances.
The case raised various issues.
Issue 4: Performance of an act as consideration. Had Carlill provided consideration in exchange for the company's promise, sufficient to create a legally binding agreement?
Decision: The act of buying and using the smoke ball provided the necessary consideration to make the promise to pay the reward enforceable.
Reason: An act performed in expectation of a known promise may constitute the consideration given in exchange for that promise, even though the act is necessarily performed before the said promise becomes legally binding. In this case, the company promised to pay a reward in exchange for the act of buying and using the smoke ball, provided the user then caught influenza.