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DUNLOP PNEUMATIC TYRE CO. LTD. v. SELFRIDGE & CO. LTD.

Section: D

Category: Case Commentary

Paper Code: CC-CP-02

Page Number: 461 - 463

Date of Publication: February 10, 2021

Citation: Chetna Priyam, Dunlop Pneumatic Tyre Co. Ltd. V. Selfridge & Co. Ltd., 1, AIJACLA, 461, 461-463, (2021).

Details Of Author(s):

Chetna Priyam, BA LLB (Hons.), ICFAI University, Dehradun


INTRODUCTION

Dunlop Pneumatic Tyre Co. Ltd. v Selfridge & Co. Ltd.​[1] is one of those leading cases of the law of contracts that set a landmark in the world of law. The concept of privity of contract was reaffirmed in this case and hence, this case is considered a great precedent. According to this law; a contract doesn’t provide anyone with the rights or doesn’t impose any obligation upon a person who is not a party to the contract. This case comment is relevant to the study of how the concept of ‘Privity of Contracts’ was reaffirmed through the way of this particular case.


NAME OF THE CASE: ​Dunlop Pneumatic Tyre Co. Ltd. v Selfridge & Co. Ltd., 1915

COURT: ​House of Lords

YEAR: 1915

(BENCH) JUDGES: Viscount Haldane LC and Lords Dunedin, Atkinson, Parker of

Waddington, Sumner, and Parmoor (5 JUDGES BENCH)

AREA OF LAW: Privity

APPEALED FROM: Court of Appeal

DECIDED: 26 April 1915

APPELLANTS: ​Dunlop Pneumatic Tyre Co. Ltd.

RESPONDENTS: Selfridge & Co. Ltd.

DECISION: Appeal dismissed

DECIDED: 26​th ​April, 1915

CITATIONS: [1915] UKHL, [1915] AC 847


FACTS

Dunlop Pneumatic Tyre Co. Ltd., a tyre manufacturing co., offered products in the market as per its resale price maintenance scheme (RPM Scheme). On 12th October, 1911 this company entered into a contract with Dew & Co. and mentioned in the contract that a certain quantity of tyres would be sold by Dunlop to Dew, as per the price given in the list. It was decided between the parties that some particular goods will not be further sold at any price which would be below the price mentioned in the RPM scheme but, it was also mentioned in the contract that Dew & Co. could sell to certain customers at less price, provided that the customers (to whom Dew & Co. would sell the goods) would give in writing that they would follow the same guidelines.

On 2​and January, 1911; Selfridge & Co. Ltd. entered into a contract with Dew & Co.

regarding the same. The same stipulation was mentioned in the contract to not sell these goods further to any private customer at any price less than the mentioned ones. Breaching this condition would lead to liquidated damage.

But, the respondents sold the goods further at less than the mentioned price to some of the private customers, and the appellant, upon gaining this knowledge, sued them for breaching the terms and conditions and also demanded the liquidated damages. Demand for injunction was also put forward to prevent respondents to continue the same.


ISSUE RAISED

● Was the appellant a party in the contract done between Dew and Selfridge?

● Can the appellant sue the respondent without any contractual relationship?

● Was Dew & Co. acting as an agent of appellants while contracting with Selfridge?​


JUDGEMENT

Three doctrines were applied here i.e. the doctrine of privity, doctrine of consideration, and the doctrine of agency. As per the privity of the contract, Dunlop was a stranger to the contract and hence couldn’t sue Selfridge. Also, there wasn’t any consideration given, between Dunlop and Selfridge. In addition to this, no agency relationship was found to exist from the part of Dew while contracting with Selfridge. The court unanimously ruled that Dunlop could not claim for damages.[2]


ANALYSIS OF THE CASE

After going through the whole case, we can analyze that this landmark case affirmed the rule of ‘Privity of contract’ that only parties to the contract can sue. It established that an agreement for resale price maintenance was not enforceable due to the matter of the privity of contract. We here find that the appellants could not sue the respondents as they were not a party to the contract between the dealers and the respondents. Even if Dew was recognized to be acting as Dunlop’s agent, appellants still couldn’t maintain the action as there was no consideration between them and Selfridge.

Hence, as analyzed, the court’s decision in this case was appropriate. The rules laid down in this case (Doctrine of Privity) are still in conformity with the existing law and this very particular case proves to be a great precedent even in today’s law world and is equally applicable in India. An example could be ​Advertising Bureau vs. CT Devaraj​[3]. In this case, a person mortgaged his property and subsequently sold the same property to a third person. The person to whom the property had been sold had agreed to pay the debt of the property but when he was sued by the person to whom the property was mortgaged, it was held that the property buyer was a stranger to contract done for mortgaging the property and hence can’t be liable.​[4]


CONCLUSION

After going through the case, I conclude that a contract can be enforced only by a party to that particular contract. There were two separate contracts in this case. One was done between Dunlop and Dew, and the second one between Dew and Selfridge. Due to this reason, Dunlop wasn’t able to enforce the contract between Selfridge and Dew. Dunlop was just a third party and a stranger to the contract. The actual contract was between Dew and Selfridge. The judges after considering the different contentions of parties rightly dismissed the allegations and ruled the case in favor of the respondents​.


[1]​ Dunlop Pneumatic Tyre Co. Ltd. v Selfridge & Co.​, 847 AC, UKHL 1 (1915). [2] Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd. Vishrut Kansal, Indian Case Law (Oct. 2020, 02, 07:28 PM), https://indiancaselaws.wordpress.com/2013/01/14/dunlop-pneumatic-tyre-co-ltd-v-selfridge-co-ltd/. [3]Advertising Bureau v. CT Devraj​ , 2251 AIR, SC (1995). [4] Harsh Mittal,​ DUNLOP ​PNEUMATIC TYRE CO. LTD v. SELFRIDGE & CO. LTD., C.L.A.W. (Oct. 2020, 17, 12:12 PM), https://www.clawlegal.org/editorial/dunlop-pneumatic-tyre-co-ltd-vs-selfridge-co-ltd/.


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