Friday, December 14, 2012

Chappell & Co Ltd v The Nestle Co Ltd. case brief

Chappell & Co Ltd v The Nestle Co Ltd.

This was not a case directly on contract - it was in fact a copyright case. Nestles advertised that they would provide customers with a copy of a record "Rockin Shoes" if they sent in 1/6d together with three wrappers from bars of Nestles' chocolate. The owners of the copyright in the record were entitled to 6.25% of the normal selling price. They argued that the value was to be calculated on the 1/6d plus the value of the wrappers. Nestles said the wrappers had no value.
By 3:2 majority in the House of Lords that the wrappers were part of the consideration price, and an injunction was granted.

Lord Reid: it is unrealistic to divorce the buying of the chocolate from the supply of the records. The consideration has two parts: (a) the buying of the chocolate bars for the wrappers; and (b) the payment of money. Clearly both are of value to Nestles.
It was said that the provision of wrappers was merely a condition prior to purchase. But if the qualification is of value to the vendor and must be re-acquired on each occasion, then it is hard not to see this as part of the consideration. Acquiring the wrappers might well involve expenditure which would not otherwise have been incurred.

Viscount Simonds (dissenting): The wrappers are valueless, and not really evidence of sale of chocolate bars to the purchaser of the record. Hence the acquisition of the wrappers was not really part of the record transaction.

Lord Somervell: A peppercorn does not cease to be a good consideration if it is established that the promisee [promisor?] does not like pepper and will throw away the corn.

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