Privity Flashcards
Dunlop v Selfridge
[1915]
Facts: Dunlop sold tyres to Dee & Co who were wholesalers. Dew & Co undertook (expressly in the contract) that the manufacturers could fix the lowest price at which they could sell the tyre and promised not to sell the tyres below that price. Dew & Co also agreed to obtain the same pricing terms from customers to whom they resold the tyres. They sold tyres to Selfridge on these terms. Defrosted broke the pricing agreement and sold the tyres at discount prices. Dunlop sued Selfridge and sought an injunction to prevent them from selling their tyres at a discount.
Held: Dunlop failed. Although there was a contract between them and Dew & Co, Selfridge were not a party to that contract and Dunlop, therefore, could not impose their terms on them.
Tweddle v Atkinson
[1861]
Facts: a couple were getting married. The father of the bride entered an agreement with the father of the groom that they would each pay the couple a sum of money. The father of the bride died without having paid. The father of the son also died so was unable to sue on the agreement. The groom made a claim against the executor of the will.
Held: the claim failed, the groom was not party to the agreement.
Beswick v Beswick
[1968]
Facts: a nephew had bought his uncle’s coal merchant’s business, and had promise as part of the deal to pay his uncle £6.50 a week until he died and his aunt £5 a week if she outlived him. She did, and the nephew refused to make payments to his aunt.
Held: HoL agreed that as administratrix of her husband’s estate, she could take his place as a party to the contract with the nephew, and thus obtain an order for specific performance.
Exceptions to the basic rule of privity:
1) Exceptions provided by statute;
2) Collateral contracts;
3) Agency;
4) Covenants in land law;
5) Trusts.
Exceptions provided by statute:
Section 148(7), Road Traffic Act 1988. Requires drivers to have third-party insurance which can be relied upon.
Collateral contracts:
Shanklin Pier v Detel Products Ltd [1951]
Facts: the claimants entered into a contract with painting contractors to paint the pier, having been assured by the defendants (paint manufacturers) that their paint would last at least seven years without deterioration. The defendants then sold the paint to the contracts, the paint peeled in 3 months. The pier owners could not sue the painters as they had carried the work out professionally and fulfilled their end of the contract. The pier owners sued the paint manufacturers.
Held: the pier owners were successful. Although they were not a party to the contract between the paint manufacturers and the painting contracts, it was held that a collateral contract had arisen from their promise as to the suitability of the paint.
Right to claim damages:
Held in Dunlop v Lambert: “where no other would be available to a person sustaining loss under which a relational legal system ought to be compensated by the person who caused it.”
Jackson v Horizon Holidays Ltd [1975]
Facts: Jackson had booked a family holiday in his sole name. The holiday was a travesty: accommodation, food, services, facilities and general standard of the hotel were so poor the family suffered great discomfort, vexation and inconvenience.
Held: CoA held that the disappointment suffered by the family was a loss to Jackson himself and awarded damages in respect of the whole family on that basis.
Contracts (Rights of Third Parties) Act 1999, changes:
Nisshin Shipping Co Ltd v Cleaves & Co Ltd [2004]
It was held that if the contract is neutral in the question of whether the term was intended to be enforceable by the third party, then section 1(2) does not disappoint section 1(1)(b).
Beswick v Beswick
The term in the contract between Mr Beswick and his nephew purported to confer a benefit on Mrs Beswick, thus falling with s1(1)(b) of the Act.
