Taj Mahal Hotel v. United India Insurance Co. Ltd
- 2022-02-17
Chappell & Co Ltd vs Nestle Co Ltd
Citation – [1960] AC 97
Judgement: Viscount Simonds, Lord Reid, Lord Tucker, Lord Keith of Avonholm, Lord Somervell of Harrow
Facts:
The defendants, Nestlé, contracted with a company manufacturing gramophone records to buy several recordings of music. The plaintiffs, Chappell & Co, held the copyright in these recordings. Nestlé offered to sell these records at a discount price to anyone presenting three wrappers from their chocolate bars. The wrappers themselves were worthless and were thrown away by Nestle.
Issue:
Whether chocolate wrappers can be considered as legal consideration, for a valid contract?
Judgement:
The court in the instant case held that the consideration should be sufficient and need not be adequate. The court held that the wrappers did form part of the consideration for the sale of records despite the fact that they had no intrinsic economic value in themselves and that the wrappers even though do not hold any monetary value was a sufficient consideration and the contract entered into by the parties are legally binding.
Analysis:
The court in this case held that the Consideration to a contract should be sufficient and need not to be adequate. There was also an example quoted in the judgement, “A contracting party can stipulate for what consideration it chooses. A peppercorn doesn’t cease to be good consideration if it is established that the promise doesn’t like pepper and will throw away the corn.” This example focuses on the importance of sufficiency in the Consideration and moreover this judgement re-affirmed the stance of the English law on consideration. It is said that consideration can be anything and the facts and outcome of the case portray that the ‘anything’ need not be restricted to money.
