Final answer:
The ratio in Carlill v Carbolic involves the legal principle that a general offer to the public can become a binding contract when someone performs the associated conditions. The court upheld Carlill's claim, as she had used the product and met the terms stated in the advertisement, thereby forming a contract. This case establishes foundational rules for contract formation.
Step-by-step explanation:
The case of Carlill v Carbolic Smoke Ball Company is a fundamental case in contract law. It deals with the principles of offer, acceptance, and the existence of consideration, which are critical to the formation of a legally binding contract.
In this case, the ratio decidendi, which refers to the legal reasoning behind the court's decision, established that a general offer to the world at large can result in a binding contract when it is accepted by someone who performs the conditions stated in the offer.
The company advertised that they would pay £100 to anyone who contracted influenza after using their smoke ball product according to the instructions provided. The court held that Ms. Carlill, who did use the smoke ball and contracted influenza, had entered into a binding contract with the Carbolic Smoke Ball Company when she relied on the advertisement and fulfilled its conditions, hence her claim for the reward was upheld.
Understanding this case is crucial as it sets a precedent in contract law, showing that even without individual negotiation between parties, a contract can be formed if the terms are clear, an intention to be bound is evidenced, and the 'acceptance' takes the form of performing the stipulated act.