In a popular South African cozy crime tv series, one character transfers her interest in a house to another in exchange a fridge magnet (memories associated with the magnet feature here; the exchange is in this episode, available here; and we shall pass over the legal plot holes in the series). This is a nice update on the traditional peppercorn consideration.
William Blackstone, in his Commentaries on the Laws of England (vol 2, 1769) 440, noted that, “in case of leases, always reserving a rent, though it be but a peppercorn … [such] considerations will … convert the gift … into a contract” (emphasis added). As Dr Damian O’Reilly explains “… during the 14th century … the Worshipful Company of Grocers [official site | wikipedia] – a charitable and ceremonial organisation in London – … used pepper as a payment mechanism and this is the origin of a ‘peppercorn rent’” (see Dunnes Stores UnLtd Company v Dafora UnLtd Company [2022] IEHC 342 (03 June 2022) [101] (Sanfey J); [2024] IECA 37 (16 February 2024) [58] (Haugton J; Noonan and Butler JJ concurring)).
Hence, in Chappell & Co Ltd v Nestle Co Ltd [1960] AC 87, 114 [1959] UKHL 1 (18 June 1959) [11] Lord Somervell of Harrow considered that chocolate wrappers submitted to Nestlé to redeem musical records were part of the consideration for the records (emphasis added):
It is said that when received the wrappers are of no value to Nestlé’s. This I would have thought irrelevant. A contracting party can stipulate for what consideration he chooses. 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.
In Phoenix Rock Enterprises v Hughes [2025] IEHC 126 (26 March 2025), Chappell was pleaded ([96]), and Kennedy J considered ([121]a) that “for contractual purposes, consideration is an essential prerequisite to a binding contract at common law but there is no necessity that it be significant, proportionate or meaningful – the proverbial ‘peppercorn rental’ is sufficient”.
Consequently, a nominal consideration can be good consideration converting a promise into an enforceable contract, provided that it is not illusory: a consideration need not be (commercially) adequate, for so long as it is (legally) sufficient (O’Neill v Murphy [1936] NI 16 (Andrews LJ)). For example, in ACC Bank plc v Dillon [2012] IEHC 474 (12 November 2012) [4.0], [5.1] Charlton J said (emphasis added):
A contract not under seal must be supported by consideration. This means that there is either some detriment to the promisee, for instance by giving value or some benefit to the promiser. However … this principle can be looked at in a mirrored way from the point of view of each party vis-à-vis the other. One party gets something by giving their promise to give something, while the other party has the expectation of that benefit and at the same time promises or delivers a value which the other wants in return. Rarely will courts condemn a bargain on the basis on the inadequacy of consideration as sometimes it is to the benefit of the parties to establish an underlying bargain by reference to the legality of a price that does not reflect the surface reality. Beneath the surface may be something which the parties to the contract want to happen and which they have pursued through fair negotiation. …
It is a principle of contract law that the law should not scrutinise the adequacy of consideration supporting a contract; …
Hence, in McDonnell v Ring [2016] IECA 16 (03 February 2016) [28] Mahon J (Irvine and Edwards JJ concurring) commented that, even where the benefit to the promisee is “relatively small”, the commercial adequacy of the consideration “is irrelevant”, and it follows that even a commercially inadequate peppercorn can be a legally sufficient consideration.
In the case of the South African fridge magnet, in Conradie v Rossouw 1919 AD 276, the Appellate Division of the South African Supreme Court held that neither the common law doctrine of consideration nor the civilian doctrine of cause form part of South African law; instead “an agreement between two or more persons entered into seriously and deliberately is enforceable” (ibid, 288 (Solomon ACJ)). This standard is met on the facts of the tv show.
In the US, the Restatement (First) of Contracts (American Law Institute, 1932) §84, illustration 1, adopted this theory (see Edmund Polubinski Jr “The Peppercorn Theory and the Restatement of Contracts” 10(1) William & Mary Law Review 201 (1968-1969). In cases of nominal consideration, “the desiderata underlying the use of formalities are here satisfied by the fact that the parties have taken the trouble to cast their transaction in the form of an exchange” and the “promise supported by nominal consideration then becomes enforceable” (Lon L Fuller “Consideration and Form” 41 Columbia Law Review 799, 820 (§18) (1941) (pdf). On this basis, a peppercorn can be a sufficient consideration, as could a fridge magnet.
On the other hand, the Restatement (Second) of Contracts (American Law Institute, 1981) §71, comment b, departed from this position: “a mere pretense of bargain does not suffice, as… the purported consideration is merely nominal” (see Note “Restatement of Contracts (Second)–A Rejection of Nominal Consideration?” 1(1) Valparaiso University Law Review 102 (1966); see also David Gamage & Allon Kedem “Commodification and Contract Formation: Placing the Consideration Doctrine on Stronger Foundations” 73(4) University of Chicago Law Review 1229 (2006)). This has proved controversial (see, eg, Joseph Siprut “The Peppercorn Reconsidered: Why a Promise to Sell Blackacre for Nominal Consideration Is Not Binding, But Should Be” 97(4) Northwestern University Law Review 1809 (2003) (ResearchGate). On this basis, a peppercorn cannot be a sufficient consideration.
There are traces of this latter position in the judgment of Kelly J in O’Keeffe v Ryanair Holdings plc [2002] 3 IR 228, [2003] 1 ILRM 14, [2002] IEHC 154 (19 June 2002) (see David Capper “The Price of Publicity” (2020) 54(2) Northern Ireland Legal Quarterly 192). Here, the plaintiff, who had been designated as Ryanair’s “one millionth passenger”, had agreed to participate in publicity in return for the defendant’s promise to give her “free flights for life”; on the question of whether this promise was supported by good consideration, Kelly J said that, under the doctrine of consideration
… a promise has no contractual force unless some value has been given for it. The court is not concerned with the adequacy of value. … The consideration to support a contract must however be real, that is to say capable of estimation in terms of value. …
If the requirement that the consideration must be “capable of estimation in terms of value” is pressed to its ultimate conclusion, this would mean that a peppercorn could not be a sufficient consideration. However, Kelly J continued that
… the participation of the plaintiff in the publicity generated on the day in question was regarded as being of value by the defendant and I see no reason why the law should not regard it as likewise being of value. …
This is exactly the point made by Lord Somervell in Chappell v Nestle and Charleton J in ACC Bank v Dillon: the parties can stipulate what constitutes consideration, and the courts should enforce it, whether it be a peppercorn, or indeed a fridge magnet with sentimental value.