Dunlop Pneumatic Tyre v. Selfridge and Co. Ltd.

"Dunlop Pneumatic Tyre v. Selfridge and Co. Ltd." [1915] A.C. 847 is a leading House of Lords case on privity of contract. It established that only a party to a contract can be sued on it.

Background

Dunlop, a tyre manufacturing company, made a contract with Dew, a trade purchaser, for tyres at a discounted price on condition that they would not resell the tyres at less than the listed price and that any reseller who wanted to buy them from Dew had to agree not to sell at the lower price either.

Dew sold the tyres to Selfridge at the listed price and made Selfridge agree not to sell at a lower price either. However, Selfridge sold the tyres below the price he promised to sell them for.

Dunlop then sued Selfridge for an injunction from selling tires and damages.

At trial the judge found in favour of Dunlop. In appeal the damages and injunction were reversed, saying that Selfridge was not a principal or an agent and thus was not bound.

The issue put to the court was whether Dunlop could get damages from Selfridge without a contractual relationship.

Reasoning

Viscount Haldane based his argument on three fundamental principles in law. First, the doctrine of privity requires that only a party to a contract can sue. Second, the doctrine of consideration requires a person with whom a contract not under seal is made is only able to enforce it if there is consideration from the promisee to the promisor. Third, the doctrine of agency requires that the principal not named in the contract can only be sued if the promisee was contracted as an agent.In application to the facts, Haldane could not find any consideration between Dunlop and Selfridge, nor could he find any indication of an agency relationship between Dew and Selfridge. Consequently, Dunlop's action must fail.