Chapman v. Rudd Paint and Varnish , 409 F.2d 635 (1969)

Chapman v. Rudd Paint and Varnish

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The Ninth Circuit held that the promotional brochure was not part of the agreement, and contained fundamental elements that did not create a security as defined by federal law. The distributor agreement specified that the success of the operation was to come from the distributor, and not the company, but the brochure relied upon by Chapman claimed that significant assistance would come from the company. The court held that by implication, some effort must therefore come from the distributor, and if the distributor is to exert some effort to be successful, then the agreement cannot be a security under federal law.

This case is also available at: http://www.mlmlegal.com/legal-cases/Chapman_v_Rudd.php.

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Published In: Civil Procedure Updates, Franchise Updates, MLM / Direct Sales Updates, MLM Consulting / Network Marketing Updates, Securities Updates

Reference Info:Federal, 9th Circuit, Washington | United States

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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