Formation of unilateral contracts

So, the best example of a unilateral contract, and one of the most famous contract law cases is the decision in Carlill v Carbolic Smoke Ball Company. Where the company advertised that it would pay a hundred pounds reward to any person who caught influenza after having used the smoke ball three times daily for two weeks, according to the printed directions. And Mrs. Carlill used the ball as prescribed and then caught flu. And the trick question that's often asked of contract law students is, what obligations did Mrs. Carlill owe under the contract? And the answer is none. Because it's a unilateral contract. So, the obligations all lie on one side. It's obligations all lay with the company. And Mrs. Carlill wasn't under any obligations at all. So, this isn't like the previous chapter where we looked at bilateral contracts where both sides were promising something to one another. Here, we're looking at unilateral contracts, and the acceptance of unilateral contract will genuinely be through performance.

As in Carlill, where Mrs. Carlill used the smoke ball, that was how she accepted the company's offer. And so, there are two key questions, really, I think, concerning the formation of unilateral contracts. The first is, does a person need to know of the offer in order to accept it? And as I explained in the chapter, I think the best view is that they do, although that is of course tough on people who act without knowledge of the reward, and can't get the reward. Whereas some people who only act because of the reward, will be able to claim the reward. And the second issue concerns whether the offeror can revoke the offer. And this splits into two main issues. The first is, how can the offeror revoke? And the second is, up till when can we offerorrevoke? And the first issue becomes difficult because there might be questions about how to communicate the revocation. So, if I've made an offer by putting an advert in the newspaper, so the offers made to the whole world, how can the revocation be effectively communicated? Because it's very difficult obviously to hunt out each individual who's read the advert. And I think that on the grounds of what's objectively reasonable, the offerorwould have to advertise the revocation, at least as widely as the original offer. So, an advert in a newspaper would have to be at least as prominent as the original offer in order to constitute an effective revocation. And the second question is, up until when can you revoke? And that is very difficult. So, in principle, if you're not bound, I'm not bound. Okay. That's how contract law would generally work. But should you really be able to revoke an offer of a unilateral contract once the other party has begun to perform? So even if they haven't yet completed performance, they can't claim the rewards, can't claim the contract price, but have begun to perform, is it then too late to revoke the offer? And I think this really depends on whether or not you can imply a term that the offeror won't revoke the offer once performance has begun. And then that comes down to whether or not it's necessary to imply such a term into the contract. So, is it necessary to make this contract work commercially to imply this sort of term? So clearly there's a link here with implied terms more generally, which we'll study in more detail in chapter fourteen.