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Contract law ~ Famous Landmark cases

Updated on April 3, 2014
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advertisement for the incredible theraputic powers of carbolic smoke balls.

Carlill v Carbolic Smoke Ball Company

Carlill vs Carbolic Smoke Ball Co., is probably the most famous case in English contract law. The facts were thus:

In 1892 The Carbolic Smoke Ball Co. advertised a £100 reward for anyone who used its Smoke Ball and yet contracted influenza. When a certain Mrs. Carlill claimed the reward, the company told her that it considered her claim 'impertinent' and referred her to its solicitor. It insisted that the offer of £100 was mere marketing 'puff' and not intended to give rise to a contract. She argued that it was a genuine offer which she had, by purchasing and using the Smoke Ball as advertised, accepted.

Mrs Carlill won the case and the rules of 'offer' and 'acceptance' were established as a precedent in contract law.


The parties to the contract have a mutual understanding of what the contract covers. For example, in a contract for the sale of a 'Cadillac', the buyer thinks he will obtain a car and the seller believes he is contracting to sell a horse, there is no meeting of the minds and the contract will likely be held unenforceable. In other words the parties must & should have a clear and unequvical understanding of what each party is expected to do or perform to make the contract valid and binding on both parties.

Every living person is involved in contract law of some description. Every time you step on a bus train or plane you are in effect entering a contract. Everytime you enter a shop whether or not you purchase something or not you by entering the shop agree implicitly to the terms of entry into that shop or store. To take a simple example if you enter a shop with a bag and do or do not purchase something the shop owner or hi/or her servant is entitled to inspect your bag to see whether or not you have taken goods from the shop without paying for it. Similarly when you go to a Restaurant and have a meal the contract is you eat the meal and agree to pay for it by the act of eating it. The restaurant has supplied the meal in turn you have formed a contract by performing the act of accepting that act and eating the meal therefore the restaurant owner or his agent is entitled to payment for that meal.

Similarly when you purchase or lease real estate you enter into a written binding contract say for instance the amount you pay for that real estate either by purchase or by rent. The time and date the lease agreement goes together with a clear identity of the parties involved and a signature to acknowledge the terms of that contract.

Key Elements

The law of contract as it applies in England and Australia goes back centuries to common law.Although contract law has developed slightly differently in Australia the basic elements of a binding contract remain the same in-both countries That is past cases form part of the decision making that goes onto settling disputes that arise today. Cases or disputes with facts of a similar kind are determined and judged on precedent that is cases that have gone before in particular points of law that make up all the element of a contract.

In general in contract law parties voluntarily enter into negotiation because that want each other to be bound by the terms and conditions of a contract.

There are several elements that must be considered to make a contract enforceable at law.
In other words a contract may be formed but it has to meet certain criteria for a court of law to enforce the conditions on the dis affected party.

Contract Has to Have Value

In order to be valid, the parties to a contract must exchange something of value. In the case of the sale of a violin, the buyer receives something of value in the form of the violin, and the seller receives money. In other words he item has to be of value.

Contract Must Be Completed

In order to be enforceable, the action contemplated by the contract must be completed. For example, if the purchaser of a violin pays the $10,000 purchase price, he can enforce the contract to require the delivery of the violin. However, unless the contract provides that delivery will occur before payment, the buyer may not be able to enforce the contract if he does not "perform" by paying the $10,000. Similarly, again depending upon the contract terms, the seller may not be able to enforce the contract without first delivering the violin.

Verbal contracts

There is an old joke that "a verbal contract isn't worth the paper it's written on". That's a reference to the fact that it can be very difficult to prove that a verbal contract exists. Absent proof of the terms of the contract, a party may be unable to enforce the contract or may be forced to settle for less than the original bargain. Thus, even when there is not an opportunity to draft up a formal contract, it is good practice to always make some sort of writing, signed by both parties, to memorialize the key terms of an agreement.

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    • profile image

      wilshireLaw 7 years ago

      At the halfway of the bankruptcy hurricane comprehensive finished Los Angeles and the reside of Meridional California is Los Angeles insolvency attorney Michael Shemtoub and his Wilshire Law group Unit. As a California insolvency attorney who has served Southern Calif.

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      shikha naik 7 years ago

      can u exactly tell me these case is related to which contract?

    • barryrutherford profile image

      Barry Rutherford 7 years ago from Queensland Australia

      No here bags can be checked on departure of the shop !

    • salt profile image

      salt 7 years ago from australia

      Id be wary about the checking bags, as if they are wrong, they can be in trouble for accusing someone of something... I cant recall the instance, but in australia, and the law is different in each state, I dont think this is true, as you have to be pretty sure before you accuse someone.