Introduction 

• This is a landmark judgment which talks about the doctrine of privity of contract and the doctrine of privity of consideration.  

Facts 

• The plaintiffs were manufacturers of motor tyres.  
• Dew and Co were the motor accessory factors. They agreed with the plaintiffs to buy some of their goods within the specified time and also not to sell the goods at a rate less than the plaintiffs’ list prices. 
• The plaintiffs had exacted such agreements with all their trade purchasers. 
• The defendants (Selfridge Co.) ordered tyres of plaintiff from D & Co in January 1912. 
• There was an agreement entered into between the defendants and D & Co allowing them certain discounts off plaintiffs’ list prices, they agreed not to sell at a price less than the list prices. 
• The plaintiffs sued the defendants for breach of contract.     

Issue Involved  

• Whether Dunlop can sue Selfridge even when no contractual relationship exists between them?   

Observations 

• The decision of the Court was based on the following factors: 
  • Privity of Contract: It states that only a party to the contract can sue in case of a breach of contract. 
  • Privity of Consideration: It provides that for a contract to exist promisee must give consideration and no other person. 
  • The only way the person not named in the contract can be sued is if he acted as an agent on behalf of the parties privy to the contract. 
• The Court held that Dew was not acting as an agent of Dunlop, therefore, the third principle will not apply in this case. 
• Further, the Court observed that in the given facts Dunlop had not given consideration to Selfridge and therefore, there could be no binding contract between the parties. 
• Dunlop was not listed as an agent within the contract and could therefore not be included as a valid third party who had rights to claim on the contract.

Conclusion

• The Court in this case held that only a person who is the party to the contract can sue in case of breach of contract. 
• It is only in cases when the party named in the contract is acting as an agent that the above shall not apply.