CONTRACT LECTURES TRANSCRIPTS Total time = 46 mins 01 secs
C. STRICKLAND
LECTURE 4
Track/Slide 5 04.51 mins
We will now look at some consideration through some key cases.
In the case of THOMAS v THOMAS 1842 a widow was promised the ability to live in a
house for as long as she wished and so long as she REMAINED A WIDOW. It was held that
she BOUGHT this promise by agreeing to pay £1 a year in rent. The £1 was seen as of value
and sufficient consideration. One could analyse this on both views of consideration, possibly
more easily on the exchange of promises for value view.
The case of CHAPELL & Co Ltd v NESTLE CO LTD 1960 is interesting.
This case involves both monetary and non-monetary consideration.
Nestle bought quantities of the record ‘Rockin’ Shoes’ from the manufacturer of the records,
the Hardy Record Manufacturing Co, for 4d each. The record manufacturer knew that Nestle
intended to use the records to help promote sales of chocolate bars. Nestle advertised the
records for sale at 1s 6d with a stipulation that an intending purchaser of the records must
send a 1s 6d postal order and in addition send in 3 wrappers from the 6d chocolate bars.
Nestle stood to make a good profit on sale of the records and get good advertising for their
chocolate bars. The wrappers had no value to them and were thrown away on receipt.
Unless these records were being sold ‘retail’ their sale breached copyright regulations. The
owners of the copyright of the record brought an action against Nestle and the record
manufacturers for an injunction to stop them from breaching these regulations on the basis
that the records were not being sold ‘retail’ because their purchase included the provision of
worthless wrappers.
In the statutory notice to the owners of the copyright in the record Nestle and the record
manufacturer had to state the ‘ordinary retail selling price’. They did this at 1s 6d WITHOUT
MENTIONING THE WRAPPERS. Chappel and Co felt that the manufacture and sale of the
record in this way infringed their copyright in the song.
The House of Lords held that Nestle and the record manufacturer were in breach of the
statutory notice of copyright because they had not mentioned the NON-PECUNIARY PART
OF THE CONSIDERATION for the record.
The majority (3:2), per Lord Reid, held that the consideration here comprised BOTH the
money paid AND the return of the wrappers which were of VALUE to Nestle because
although some of the wrappers would have been sent by people who did not buy the chocolate
themselves or who bought their chocolate anyway, some of the wrappers would have been
sent by customers NEW to the chocolate and this definitely represented a BENEFIT to
Nestle.
In the case of ALLIANCE BANK v BROOM 1864 the consideration was seen as the fact
that the bank was INDUCED not to sue (forebear from suing) the defendant for his debt owed
to them (£22,000) by his promise to provide security for the debt in the form of goods.