A newspaper advertisement published in London during the 1890's read, in part:

to any Person who contracts the increasing epidemic
I N F L U E N Z A ,
colds, or any disease caused by taking cold, after having used the CARBOLIC SMOKE BALL three times daily for two weeks according to the printed directions supplied with each ball.
with the ALLIANCE BANK, Regent Street, shewing our sincerity in the matter.

And thus began the story of the Carbolic Smoke Ball case, one of the most well-known cases in the common law of contracts, to the point where one U.S. law school began holding a yearly formal gathering called the Carbolic Smoke Ball (no, I don't know whether it involves narcotics or not). There's even a web site at http://www.carbolicsmokeballco.com/ that specializes in gifts for lawyers.

"What the hell is a Carbolic Smoke Ball?" you're probably asking. It was a primitive type of inhaler, consisting of a spherical bottle with a short neck on top. The user would hold the ball under their nose and inhale the fumes from an ignited dry powder inside the ball. It was a relatively inexpensive form of treatment: the ball itself cost ten shillings, and powder refills (which would last for several weeks of regular use) cost five shillings. During the 1890's, Carbolic Smoke Balls were being sold in Britain, Canada, and the United States.

The Carbolic Smoke Ball ran into legal trouble when somebody discovered that it didn't actually prevent influenza. They discovered this, appropriately enough, by using the Carbolic Smoke Ball as directed, and contracting the disease anyway. So, figuring they had won the lottery, they wrote to the Carbolic Smoke Ball Company and asked for their £100. The company told them that the advertisement wasn't supposed to be serious. So the consumer filed suit.

Under the common law, an advertisement doesn't constitute an actual offer to exchange something. If you see something advertised, there's usually no guarantee that you'll actually get it unless you contact the advertiser and make a deal with them. There are a lot of exceptions to this rule—some are made for highly unusual ads (in terms of specificity, consideration, or other factors), and others are created by truth in advertising statutes—but the basic rule still holds true today. A few years back, when Pepsi used a Harrier to advertise their Pepsi Points scheme, one college kid actually got enough Pepsi Points to get the Harrier under the terms of the ad, but he couldn't get the jet because the ad was not a binding offer for exchange (the matter went to court and the judge did everything short of laughing the kid out).

This was one of several arguments that the Carbolic Smoke Ball's manufacturers made: they contended that the ad was too vague to constitute a binding offer, and that it was really nothing more than "a puff" and "a bet." The Queen's Bench deemed this argument right out. Their reasoning: if the offer wasn't supposed to be real, why would the company have deposited a thousand pounds in the bank as consideration? It would have been one thing to make an overblown offer that didn't appear reasonable to the consumer; it was another thing to make the offer and then back it up with a real bank deposit.

The company also argued that the offer couldn't form a contract because it was impossible for everyone who saw the ad to contact the company and accept the offer. This argument fizzled out as well, thanks to the idea of acceptance by performance. The court reasoned that since the offer was open to anyone who "used" the Carbolic Smoke Ball, the implied method of accepting the offer would be to use the product, contract one of the mentioned illnesses, and then notify the company.

The company then argued that the offer should only apply to people who bought the smoke ball directly from the company. Their reasoning: Otherwise, a person could steal the smoke ball, use it, get sick, and claim the reward. The court said no to this argument as well, stating that merely using the ball as directed (three times daily for a period of weeks) was enough of an action to constitute consideration of the contract in and of itself. The court even refused to acknowledge that using the smoke ball without buying it directly was an action not beneficial to the company, holding that it would inherently benefit the company by spreading word of the effectiveness of its product.

At the end, the Lord Justices kicked the Carbolic Smoke Ball Company's appeal out of court, thus forcing the smoke ballers to deliver on the terms of their advertisement. Needless to say, people don't make similar advertisements nowadays as "a puff" without inserting a clear disclaimer somewhere, and that's probably how it should be.

Carlill v. Carbolic Smoke Ball Company, 1 QB 256 (1893).