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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