weeks. Mrs Carlill saw this advertisement, bought a
smoke ball from a chemist and used it as directed but
still caught flu. Even though Mrs Carlill had not bought
the smoke ball directly from the company, there was
a contract between them. The essential requirements of
offer and acceptance and consideration were all present.
The company had made Mrs Carlill an offer in its ad-
vertisement, which she had accepted by purchasing the
smoke ball. The company’s promise was supported by
consideration from Mrs Carlill because she had bought
the smoke ball from a retail chemist.
The same principle applies where the manufacturer’s
salesman calls on the consumer and makes promises
about the performance of a product. If the consumer
acts on the sales talk by obtaining the product from his
supplier and not directly from the manufacturer, the
consumer will be able to hold the manufacturer to his
promises under a collateral contract.Part 3Business transactions
326
Shanklin Pier Ltdv Detel Products
Ltd(1951)
Shanklin Pier Ltd engaged a firm of painting contractors
to paint its pier at Shanklin on the Isle of Wight, specify-
ing that they should use a paint called DMU, which was
manufactured by Detel Products Ltd. A director of Detel
Products had previously called on the managing director
of the pier company and recommended DMU for the job,
saying that it would last seven to ten years. In fact, the
paint lasted only three months. The pier company could
not sue the manufacturer for breach of a condition im-
plied under the Sale of Goods Act (that the paint would
be reasonably fit for the stated purpose) because it had
not bought the paint itself. Nor could it sue the painters,
who, after all, had only followed the instructions they
were given. So the pier company sued Detel Products
Ltd for breach of its promise that the paint would last
seven to ten years.
It was held that, in addition to the contract for the sale
of the paint (between the manufacturer and the painters)
and the contract to paint the pier (between the painters
and the pier owner), there was also a collateral contract
between the pier company and the manufacturer. The
bargain was that the manufacturer guaranteed the suit-
ability of DMU and in return the pier company specified
in its contract with the painters that DMU paint should be
used.Manufacturer’s guarantees and warranties
Sometimes the manufacturer’s confidence in his pro-
duct is expressed formally in the shape of a writtenproducts. However, the chain of responsibility may be
broken where, for example, there are reasonable exemp-
tion clauses in the contract between the retailer and the
wholesaler. If this is the case, the manufacturer will
escape liability and the innocent retailer must absorb the
cost of compensation. There is a case for a consumer,
irrespective of whether he purchased the defective item,
being able to take direct action against the manufac-
turer, but there are limited circumstances in which the
manufacturer can be sued. These are:
■under a collateral contract between the manufacturer
and the consumer;
■in tort;
■under Part I of the Consumer Protection Act 1987;
■under the Sale and Supply of Goods to Consumers
Regulations 2002.
Collateral contract
A manufacturer would soon go out of business if he
directed all his energies to producing his goods as
cheaply as possible. He must develop a marketing
strategy to ensure that potential customers know about
his products and are encouraged to buy them. This can
be achieved, for example, by an advertising campaign,
special promotions, personal visits by sales reps, or the
inclusion of a ‘guarantee’ or ‘warranty’ with the goods.
Such activities may result in the manufacturer being
directly liable in contract to the consumer, even though
the consumer buys the goods from the retailer. In this
situation there is clearly a contract of sale between the
consumer and the retailer to which the manufacturer is
not a party, but there may also be another contract
between the consumer and the manufacturer. The
second less obvious contract is known as a collateral
contract: it is, in effect, an implied contract between the
manufacturer and the consumer. A collateral contract
may arise in two situations:
■from advertising and sales talk; and
■under a manufacturer’s guarantee or warranty.
Advertising and sales talk
The classic example of a manufacturer being held to
account for extravagant claims in an advertising cam-
paign is the case of Carlillv Carbolic Smoke Ball Co
(1893). You will recall that the company promised in
an advertisement to pay £100 to anyone who contracted
flu after using the smoke ball three times daily for two