- UNDER DOCTRINE OF PRIVITY OF CONTRACT
- BENCH: iscount Haldane LC and Lords Dunedin, Atkinson, Parker of Waddington, Sumner, Parmoor
FACTS:
- Dunlop Ltd. (Appellant) was a tire manufacturing company who came to an agreement with a dealer against selling his products below a recommended retail price
- Dunlop further required its dealers to profess this agreement with their retailer i.e. Selfridge (Defendant)
- The agreement stipulated for a £5 penalty to Dunlop in damages if tyres were sold below RRP. However this agreement was done between the dealer and Selfridge where Dunlop became a 3rd party.
- Selfridge broke the agreement by selling tyres below the RRP and this led to an action which was brought by Dunlop
ISSUES:
Whether the Appellant had the right to damages and injunction without being in a contractual relationship with the Defendant
SUBMISSION BY APPELLANT:
- That the Defendants were liable to pay for damages as per the agreement entered with the Dealers
SUBMISSION BY DEFENDANT:
- That Dunlop cannot enforce the contract as they were not party to the agreement
JUDGMENT:
The court unanimously held that Dunlop Tyres Ltd. Could not claim for damages in this case. It observed that firstly, only a party to the contract can file a claim. Secondly, there was no consideration flowing from Dunlop to Selfridge hence there was no conclusion of a contract as well. Dunlop was not a listed agent under the terms of the contract and therefore could not be included in the contract as a third party.
