In legal parlance, a peppercorn is a metaphor for a very small cash payment or other nominal consideration, used to satisfy the requirements for the creation of a legal contract. It is featured in ‘Chappell & Co Ltd v Nestle Co Ltd’ (1960), 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.’ However, the cited passage is mere dicta, and not the basis for the decision.
In English law, and other countries with similar common law systems, a binding legal contract requires that each party must provide consideration. In other words, each party will give something of value to the other party for the contract to be considered binding. The situation is different under contracts within civil law jurisdictions because such nominal consideration can be categorized as a disguised gift.
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The Daily Omnivore 