Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847

Dunlop manufactured tyres and sought to maintain retail prices. It sold tyres to a dealer, Dew & Co, under an agreement requiring Dew not to sell below Dunlop's list prices and to obtain similar undertakings from retailers. Dew later sold Dunlop tyres to Selfridge. In a written agreement with Dew, Selfridge promised not to resell below the stipulated prices and agreed to pay a fixed sum for each breach to Dunlop. Selfridge nevertheless sold tyres below the permitted price. Dunlop sued Selfridge to enforce the undertaking, although Dunlop was not named as a party to the contract between Dew and Selfridge. Dunlop argued that Dew had contracted as its agent and that it could therefore enforce Selfridge's promise.

Could Dunlop enforce Selfridge's promise despite not being a party to the downstream contract, and had consideration for that promise moved from Dunlop?

The House of Lords dismissed Dunlop's appeal. A person who is not a party to a contract cannot ordinarily sue on it. Dunlop could avoid that privity problem only by establishing that Dew contracted as its agent, but an agency analysis did not solve the separate requirement of consideration. Even assuming that Dew acted for Dunlop, Dunlop had provided nothing in exchange for Selfridge's promise under the agreement being enforced. The supply of the tyres arose under the distinct contract between Dunlop and Dew, while the resale and undertaking were contained in the later contract between Dew and Selfridge. Because no consideration moved from Dunlop as promisee, Dunlop could not enforce the price-maintenance promise against Selfridge.

At common law, only a party to a contract may enforce it, subject to recognised exceptions. In addition, a promisee seeking to enforce a simple contract must have furnished consideration, although the consideration may be given to the promisor or to another person at the promisor's request. Privity and consideration are distinct requirements.

The case became a standard statement of the traditional privity rule and the requirement that consideration move from the promisee. It should now be read alongside the Contracts (Rights of Third Parties) Act 1999. Section 1 permits an identified third party to enforce a term where the contract expressly allows it or the term purports to confer a benefit, unless the parties intended otherwise. The Act qualifies the practical effect of the common-law privity rule but does not abolish it. Tweddle v Atkinson and Beswick v Beswick remain important comparisons.