Goodwill: the "cat, rat and dog" (and rabbit)

What is goodwill and how may it be divided?

Whilst more recent cases have considered this often important question, a classic expression is found in Whiteman Smith Motor Co Ltd v Chaplin [1934] 2 KB 35, a decision of the Divisional Court, on appeal from the Bloomsbury County Court. In his reasons Scrutton LJ wrote:

"A division of the elements of goodwill was referred to during the argument, and appears in Mr. Merlin's book as the "cat, rat and dog" basis. The cat prefers the old home to the person who keeps it, and stays in the old home though the person who has kept the house leaves. The cat represents that part of the customers who continue to go to the old shop, though the old shopkeeper has gone; the probability of their custom may be regarded as an additional value given to the premises by the tenant's trading. The dog represents that part of the customers who follow the person rather than the place; these the tenant may take away with him if he does not go too far. There remains a class of customer who may neither follow the place nor the person but drift away elsewhere. They are neither a benefit to the landlord nor the tenant and have been called "the rat" for no particular reason except to keep the epigram in the animal kingdom. I believe my brother Maugham has introduced the rabbit, but I will leave him to explain the position of the rabbit."

Maugham LJ (elder brother of the novelist) wrote:

"...really, there should be a fourth animal, the rabbit, to indicate customers who come simply from propinquity to the premises; and if this is borne in mind, it will be apparent that the rabbit may be much bigger than the cat, who (if indeed it does not wholly vanish) may well shrink to the dimensions of a mouse."