Post v. Jones (US Supreme Court 1856) – A Protype Early Transfer Pricing Type Case

12 Pages Posted: 14 Jul 2015 Last revised: 30 Jul 2015

See all articles by Rupert Macey-Dare

Rupert Macey-Dare

University of Oxford - Saint Cross College; Middle Temple; Minerva Chambers

Date Written: July 12, 2015


On 2 August 1849, towards the end of a 3 year voyage, the whaling ship Richmond ran aground with a full cargo of oil and whalebone, on the rocky coastline of the Behring Straits. Three passing ships, the Elizabeth Frith, the Panama and the Junior immediately came to the rescue, both of the Richmond's crew and also of the Richmond’s cargo, which they bought for fire-sale prices at an impromptu auction. The Richmond's owners in due course objected, and 7 years later on, in 1856, the validity of the auction was a key issue before the US Supreme Court. This court pronounced the sale invalid and clarified the key legal principal that a contract is only valid if parties have both the power and real freedom to contract.

However there was a second question considered in detail by the Supreme Court, namely what was the alternative fair remuneration that should be substituted for the salvors? This led to a complex and sophisticated analysis of the business risks and fair returns for both parties. Although the context was admiralty law and commercial salvage rather than international tax, the Supreme Court's analysis is remarkably close modern transfer pricing analysis and Post v Jones can perhaps also be viewed as a prototype early transfer pricing type case.

Keywords: admiralty, salvage, transfer pricing, risk, return, whaling

JEL Classification: B19, H29

Suggested Citation

Macey-Dare, Rupert, Post v. Jones (US Supreme Court 1856) – A Protype Early Transfer Pricing Type Case (July 12, 2015). Available at SSRN: or

Rupert Macey-Dare (Contact Author)

University of Oxford - Saint Cross College ( email )

Saint Giles
United Kingdom

Middle Temple

Middle Temple Lane
London, EC4Y 9AT
United Kingdom

Minerva Chambers

United Kingdom

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