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Chappell & Co Ltd v Nestle Co Ltd

Chappell & Co Ltd v Nestle Co Ltd [1959] UKHL 1 is an important English contract law case, where the House of Lords confirmed the traditional doctrine that consideration must be sufficient but need not be adequate.

Chappell & Co Ltd v Nestle Co Ltd
CourtHouse of Lords
Full case nameCHAPPELL AND COMPANY LIMITED and others v THE NESTLE COMPANY LIMITED and others
Decided18 June 1959
Citation(s)[1960] AC 87
Transcript(s)UKHL 1
Case opinions
Lord Somervell
Court membership
Judge(s) sittingViscount Simonds, Lord Reid, Lord Tucker, Lord Keith of Avonholm, Lord Somervell of Harrow
Keywords
Consideration, adequacy, copyright

FactsEdit

Chappell & Co. owned the copyright to "Rockin’ shoes" (by The King Brothers). Nestle was giving away records of it to people who sent in three wrappers from 6d chocolate bars, as well as 1s 6d. The Copyright Act 1956 s 8 said a 6.25% royalty needed to be paid on the ‘ordinary retail selling price’ to the owners of copyrights. Nestle said 1s 6d was the ordinary retail selling price, but Chappell & Co argued that it should be more and sought an injunction for breach of CA 1956 s 8. In this way the question arose as to whether the wrappers constituted partial consideration for the records. Mr Justice Upjohn granted an injunction, the Court of Appeal (Lords Justices Jenkins and Ormerod; Lord Justice Romer dissenting) reversed his decision, and Chappell & Co appealed.

JudgmentEdit

The majority of the House of Lords (Lord Reid, Lord Tucker and Lord Somervell of Harrow) held that the wrappers (although of trivial economic value and ultimately thrown away by Nestle) were part of the consideration; Section 8 of the Copyright Act 1956 was intended to apply where a money sum was the entire consideration for the sale and since this sale was outside of s. 8 copyright had been breached.

Lord Somervell said the following.

Viscount Simonds and Lord Keith of Avonholm delivered dissenting judgments.

See alsoEdit

  • Bret v JS (1600) Cro Eliz 756, love and affection not good consideration
  • Evans v Llewellin (1787) 1 Cox CC 333, share of estate sale set aside on grounds of very low price
  • Thomas v Thomas (1842) 2 QB 851, there must be sufficient consideration "in the eyes of the law"
  • Shadwell v Shadwell [1860] EWHC CP J88, performing a pre-existing duty to a third party still good consideration, or that a request to perform an act already undertaken can be implied
  • Fry v Lane (1888) 40 ChD 312, suggested that inadequate consideration not relevant
  • In re Wragg Ltd [1897] 1 Ch 796, company law case, where Court of Appeal refused to impeach a share sale transaction alleged to have been at an undervalue
  • Batsakis v. Demotsis, 226 S.W.2d 673 (1949), an American case in which the court held that a few drachma was good consideration

ReferencesEdit

  • PS Atiyah, 'Contract and Fair Exchange' in Essays on Contract (1986)

NotesEdit

External linksEdit