Carlill v. the Carbolic Smoke Ball Company 2 Q.B. 484
(Judgment by: HAWKINS)
v. the Carbolic Smoke Ball Company
Contract by way of Wagering
Insurance against Disease
8 & 9 Vict. c. 109
14 Geo. 3, c. 48, s. 2.
Judgment date: 4 July 1892
The facts not being in dispute, I was requested to hear the legal objections discussed on further consideration, and to enter the verdict and judgment as I thought right. I have done so, and I proceed now to deliver my judgment.
Four questions require consideration in determining this case.
- Was there a contract of any kind between the parties to this action?
- Was such contract, if any, wholly or partly in writing so as to require a stamp?
- Was the contract a wagering contract?
- Was it a contract of insurance affected by statute, 14 Geo. 3, c. 48, s. 2.
As regards the first question, I am of opinion that the offer or proposal in the advertisement, coupled with the performance by the plaintiff of the condition, created a contract on the part of the defendants to pay the £100 upon the happening of the event mentioned in the proposal. It seems to me that the contract may be thus described. In consideration that the plaintiff would use the carbolic smoke ball three times daily for two weeks according to printed directions supplied with the ball, the defendants would pay to her £100 if after having so used the ball she contracted the epidemic known as influenza.
The advertisement inserted in the Pall Mall Gazette in large type was undoubtedly so inserted in the hope that it would be read by all who read that journal, and the announcement that £1000 had been deposited with the Alliance Bank could only have been inserted with the object of leading those who read it to believe that the defendants were serious in their proposal, and would fulfil their promise in the event mentioned; their own words, "shewing our sincerity in the matter," state as much. It may be that, of the many readers of the advertisement, very few of the sensible ones would have entertained expectations that in the event of the smoke ball failing to act as a preventive against the disease, the defendants had any intention to fulfil their attractive and alluring promise; but it must be remembered that such advertisements do not appeal so much to the wise and thoughtful as to the credulous and weak portions of the community; and if the vendor of an article, whether it be medicine smoke or anything else, with a view to increase its sale or use, thinks fit publicly to promise to all who buy or use it that, to those who shall not find it as surely efficacious as it is represented by him to be he will pay a substantial sum of money, he must not be surprised if occasionally he is held to his promise.
I notice that in the present case the promise is of £100 reward; but the substance of the offer is to pay the named sum as compensation for the failure of the article to produce the guaranteed effect of the two weeks' daily use as directed. Such daily use was sufficient legal consideration to support the promise. In Williams v. Carwardine  4 B. & Ad. 621 the defendant, on April 25, 1831, published a handbill, stating that whoever would give such information as should lead to the discovery of the murder of Walter Carwardine should, on conviction, receive a reward of £20 In August, 1831, the plaintiff gave information which led to the conviction of one Williams. The Court, consisting of Lord Denman, C.J., Littledale, Parke, and Patteson, JJ., held, that the plaintiff was entitled to recover the £20 upon the ground that the advertisement amounted to a general promise or contract to pay the offered reward to any person who performed the condition mentioned in it, namely, who gave the information. If authority was wanted to confirm the view I have taken, it is furnished by the case I have just cited.[F1]
This brings one to the second question, whether the advertisement, which is the only written or printed document affecting the contract, requires to be stamped as an agreement before it can be admitted in evidence. This depends upon the language of the Stamp Act, 1891 (54 & 55 Vict. c. 39), which requires "an agreement, or any memorandum of an agreement .... under hand only, whether the same be only evidence of a contract, or obligatory upon the parties from its being a written instrument," to be duly stamped. Whether a written or printed document falls within this requirement depends upon its character at the time it was committed to writing, or print, and issued. If at the time no concluded contract had been arrived at by the contracting parties, it certainly could not in any sense be treated as an agreement, nor could it be treated as a memorandum of an agreement, for there could be no memorandum of an agreement which had no existence. No document requires an agreement stamp unless it amounts to an agreement, or a memorandum of an agreement. The mere fact that a document may assist in proving a contract does not render it chargeable with stamp duty; it is only so chargeable when the document amounts to an agreement of itself or to a memorandum of an agreement already made. A mere proposal or offer until accepted amounts to nothing. If accepted in writing, the offer and acceptance together amount to an agreement; but, if accepted by parol, such acceptance does not convert the offer into an agreement nor into a memorandum of an agreement, unless, indeed, after the acceptance, something is said or done by the parties to indicate that in the future it is to be so considered: see Edgar v. Black 1 Stark. 464; Chaplin v. Clarke 4 Ex. 407, per Maule, J; Hudspeth v. Yarnold 9 C. B. 625; Clay v. Crofts 20 L. J. (Ex.) 361. I think for the reasons I have given, supported as they are by authority, the advertisement does not require to be stamped.
The third question is whether the contract I have found to exist is a contract by way of gaming or wagering within the meaning of statute 8 & 9 Vict. c. 109, s. 18, which renders such contracts null and void, and, therefore, not enforceable by action. I think it is not. It is not easy to define with precision what amounts to a wagering contract, nor the narrow line of demarcation which separates a wagering from an ordinary contract; but, according to my view, a wagering contract is one by which two persons, professing to hold opposite views touching the issue of a future uncertain event, mutually agree that, dependent upon the determination of that event, one shall win from the other, and that other shall pay or hand over to him, a sum of money or other stake; neither of the contracting parties having any other interest in that contract than the sum or stake he will so win or lose, there being no other real consideration for the making of such contract by either of the parties. It is essential to a wagering contract that each party may under it either win or lose, whether he will win or lose being dependent on the issue of the event, and, therefore, remaining uncertain until that issue is known. If either of the parties may win but cannot lose, or may lose but cannot win, it is not a wagering contract.
It is also essential that there should be mutuality in the contract. For instance, if the evidence of the contract is such as to make the intentions of the parties material in the consideration of the question whether it is a wagering one or not, and those intentions are at variance, those of one party being such as if agreed in by the other would make the contract a wagering one, whilst those of the other would prevent it from becoming so, this want of mutuality would destroy the wagering element of the contract and leave it enforceable by law as an ordinary one: see Grizewood v. Blane 11 C. B. 526; Thacker v. Hardy 4 Q.B.D. 685; Blaxton v. Pye 2 Wils. 309. No better illustration can be given of a purely wagering contract than a bet on a horse-race. A. backs Tortoise with B. for £100 to win the Derby. B. lays ten to one against him - that is, 1000 to 100. How the event will turn out is uncertain until the race is over. Until then, A. may win £1000 or he may lose £100, B. may win £100 or he may lose £1000; but each must be a winner or a loser on the event. Under the wager neither has any interest except in the money he may win or lose by it. True it is that one or both of the parties may have an interest in the property of the horse; but that interest is altogether apart from the bet, and each party is in agreement with the other as to the nature and intention of his engagement. If any one desires to read more upon the subject of wagers he will find the subject fully and clearly treated in Mr. Stutfield's able and learned book. One other matter ought to be mentioned, namely, that in construing a contract with a view to determining whether it is a wagering one or not, the Court will receive evidence in order to arrive at the substance of it, and will not confine its attention to the mere words in which it is expressed, for a wagering contract may be sometimes concealed under the guise of language which, on the face of it, if words were only to be considered, might constitute a legally enforceable contract. Such was the case in Brogden v. Marriott 3 Bing. N. C. 88., in which under the guise of a contract for the sale by the defendant to the plaintiff of a horse at a price to depend on the event of a trial of its speed and staying power, there was concealed a mere bet of the defendant's horse to £200 that the horse within a month should trot eighteen miles within an hour. The defendant's horse having failed to accomplish the task set him, plaintiff claimed the horse at a nominal price of 1s. The nature of this contract was transparent to any person of ordinary intelligence, and the plaintiff in vain argued that it was a bona fide conditional bargain. The Court held it to be nothing more nor less than a mere wagering contract prohibited by the then unrepealed statute 9 Anne, c. 14. In that case the nature of the contract was very clearly to be inferred from the statement of it in the record. Of course, if in any case it is suggested that a contract good on the face of it was a mere device to elude the operation of the statute, the question would be one for a jury to solve: see also Hill v. Fox 4 H. & N. 359; Grizewood v. Blane 11 C. B. 526. In the present case an essential element of a wagering contract is absent. The event upon which the defendants promised to pay the £100 depended upon the plaintiff's contracting the epidemic influenza after using the ball; but, on the happening of that event, the plaintiff alone could derive benefit. On the other hand, if that event did not happen, the defendants could gain nothing, for there was no promise on the plaintiff's part to pay or do anything if the ball had the desired effect. When the contract first of all came into existence (i.e., when the plaintiff had performed the consideration for the defendants' promise), in no event could the plaintiff lose anything, nor could the defendants win anything. At the trial it was not even suggested that any evidence could be offered to alter the character of the contract or the facts as deposed to by the plaintiff. I am clearly of opinion that, if those facts established a contract, as I think they did, it was not of a wagering character.
As to the objection that this contract (if any) was one of insurance, and invalid for non-compliance with the statute 14 Geo. 3, c. 48, s. 2, which enacts that "it shall not be lawful to make any policy or policies on the life or lives of any person, or other event or events, without inserting in such policy or policies the person or persons, name or names, interested therein, or for whose use, benefit, or on whose account such policy is so made or underwrote," it seems to me that the simple answer to that objection is that the section relates only to a policy which is a written document, and cannot apply to a contract like the present, which is created by a written proposal or offer accepted by the fulfilment by the plaintiff of the conditions attached to the offer. I do not feel it necessary to discuss the question whether the contract is one of insurance, which kind of contract Blackburn, J., in Wilson v. Jones Law Rep. 2 Ex. at p. 150, thus describes: "A policy is, properly speaking, a contract to indemnify the insured in respect of some interest which he has against the perils which he contemplates it will be liable to." My present opinion is that it does not amount to such a contract, and certain I am that neither of the parties so intended it.
In the pleadings I find a further defence that the contract was contrary to public policy; but the learned counsel for the defendants was unable to point out to me any grounds for such a contention other than those I have already discussed.
It follows from what I have said that, in my opinion, the plaintiff is entitled to recover the £100 I therefore direct a verdict to be entered for the plaintiff for £100, and judgment accordingly with costs.
"In this case the Court held, that the fact, as found by the jury, that the plaintiff was not induced by the offer of the reward, but by other motives, to give the information, did not affect her right to recover. I presume, however, that the offer had been brought to her knowledge before the information was given. Otherwise, it is difficult to understand how it could be said that she was party to a contract, or gave the information in fulfilment of the condition."