Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd

Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd
Court	House of Lords
Full case name	Dunlop Pneumatic Tyre Company, Limited v Selfridge and Company, Limited
Decided	26 April 1951
Citation(s)	[1951] UKHL 1 [1951] AC 847
Transcript(s)	House of Lords transcript
Case history
Appealed from	Court of Appeal
Court membership
Judges sitting	Viscount Haldane Lord Dunedin Lord Atkinson Lord Parker Lord Sumner Lord Parmoor
Keywords
Competition law Privity of contract Resale price maintenance

Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1951] UKHL 1 (26 April 1951), [1951] AC 847 is an English contract law case, with relevance for UK competition law decided in the House of Lords. It established that an agreement for resale price maintenance was unenforceable as a matter of privity of contract.^[1]

It should not be confused with Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd,^[2] a separate decision of the House of Lords in the preceding year relating to substantially the same resale price maintenance agreement but ruling on the concept of liquidated damages.

Under the modern law of the Competition Act 1998 or EU competition law an agreement like this would be regulated as an anticompetitive agreement.

Facts

Dunlop made tyres. It did not want them sold cheaply but to maintain a standard resale price. It agreed with its dealers (in this case, Dew & Co.) not to sell them below its recommended retail price. It also bargained for dealers to get the same undertaking from their retailers (in this case, Selfridge). If retailers did sell below the list price, they would have to pay £5 per tyre in liquidated damages to Dunlop. Dunlop thus was a third party to a contract between Selfridge and Dew. When Selfridge sold the tyres at below the agreed price, Dunlop sued to enforce the contract by injunction and claimed damages. Selfridge argued that Dunlop could not enforce the burden of a contract between Dunlop and Dew, which Selfridge had not agreed to.

At trial, the judge of first instance, found in favour of Dunlop. At 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 House of Lords as to whether Dunlop could get damages from Selfridge without a contractual relationship. The House of Lords, in a unanimous decision from Viscount Haldane L.C., Lord Dunedin, Lord Atkinson, Lord Parker of Waddington, Lord Sumner, and Lord Parmoor, held that it could not.

Judgment

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, or to some other person at the promisor's request.
• Third, the doctrine of agency requires that a principal not named in the contract (an undisclosed principal) can only be sued if the promisor 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, for which separate consideration from that paid contractually by Selfridge to Dew would need to have been found. Consequently, Dunlop's action must fail.

See also

• English contract law
• Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co [1915] AC 79, regarding liquidated damages.

Notes