Dunlop Pneumatic Tyre Co Ltd v. Selfridge & Co Ltd

Facts

• Dunlop manufactured tyres and sold them to Dew & Co (a dealer) under a contract requiring Dew not to sell below Dunlop's list price
• The contract also required Dew to obtain a similar undertaking from any sub-purchaser
• Dew sold tyres to Selfridge under a contract in which Selfridge agreed not to sell below Dunlop's price and agreed to pay £5 per tyre as liquidated damages for each breach
• Selfridge sold tyres below the list price
• Dunlop sued Selfridge directly for breach

Issue

1. Whether a manufacturer (Dunlop) can enforce a price-maintenance agreement against a retailer (Selfridge) with whom it has no direct contract?

Held

• The House of Lords unanimously held that Dunlop's claim failed
• Two principles barred the claim:
• Privity: Only a party to a contract can sue upon it. Dunlop was not party to the Dew-Selfridge contract
• Consideration: Dunlop had provided no consideration to Selfridge. The consideration for Selfridge's promise moved from Dew, not from Dunlop
• Viscount Haldane LC's classic formulation: "Only a person who is a party to a contract can sue on it... our law knows nothing of a jus quaesitum tertio arising by way of contract"

Ratio Decidendi

In English law, only a person who is party to a contract can sue upon it. Additionally, a person from whom no consideration has moved to the defendant cannot enforce the defendant's contractual promise. These twin doctrines, privity of contract and the requirement that consideration must move from the claimant, together bar third parties from enforcing contracts made for their benefit. There is no doctrine of jus quaesitum tertio (third-party rights from contract) in English common law.