Peppercorn (law)

It is featured in Chappell & Co Ltd v Nestle Co Ltd ([1960] AC 87), an important English contract law case where the House of Lords stated that "a peppercorn does not cease to be good consideration if it is established that the promisee does not like pepper and will throw away the corn".

For example, in the 1904 case Fischer v. Union Trust Co., the Michigan Supreme Court held that the one dollar paid for the sale of real property did not constitute valuable consideration since the transaction had not been bargained for—a dollar was handed to a mentally incompetent "buyer" who then dutifully handed it to the "seller".

So the contract may be written to reflect that the house is being sold in return for "ten dollars and other good and valuable consideration".

[8] Another common example is the English practice of "peppercorn rent", the nominal rental sum for property, land or buildings.

[9] The notional collection of the annual peppercorn rent helps to maintain a formal landlord–tenant relationship between the two parties, precluding the risk of a claim for adverse possession from the tenant arising, were no consideration to be paid for an extended period.

For example, many of the buildings in London's Covent Garden are leased at a rent of "one red apple and a posy of flowers",[11] the National Coastwatch station at St Albans Head occupies buildings owned by the Encombe Estate in exchange for "one crab per annum if demanded"[12] while the Isles of Scilly Wildlife Trust leases untenanted land on the Isles of Scilly from the Duchy of Cornwall for one daffodil per year.

[14] The Masonic Lodge of St. George's, Bermuda, rents the Old State House as its lodge for the annual sum of a single peppercorn, presented to the Governor of Bermuda on a velvet cushion atop a silver platter, in an annual ceremony performed since 1816 on or about 23 April.

Each year a peppercorn is presented by the Treasurer of the University to the Chairman of the Bath and North East Somerset Council as rent (but also to further the relationships between "town and gown").