Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd.

Dunlop Pneumatic Tyre Co. Ltd. v. Selfridge & Co. Ltd.

[1915] AC 847

(Consideration-agency)

FACTS:

Dunlop, a tire manufacturing company, made a contract with Dew for sale of tires at a discounted price on condition that they would not resell the tires at less than the listed price and that any reseller who wanted to buy them from Dew had to agree not to sell at the lower price either. Dew sold the tires to Selfridge on the same Price Maintenance Terms, but Selfridge proceeded to sell the tires below the price he promised to sell them for.

ISSUES:

1) Whether there was any contract between Dunlop and Selfridge?

2) Whether Dew contracted with Selfridge in the capacity of an agent of Dunlop?

3) Whether Dunlop gave any consideration by itself or through the promisee, acting as his agent in giving it?

HELD:

1) Dunlop was acting as complete stranger to the contract between Selfridge and Dew and thus on account of privity of contract couldn’t sue Selfridge for breach of its agreement with Dew. It was a mere beneficiary to it on account of Price Maintenance Clause.

2) On whatever terms the contract between Selfridge and Dew was made was to be solely determined by them and was not in any way regulated or stipulated by Dunlop apart from the Price Maintenance Clause. While Dew was assumed to be acting as agent while inserting PMC in the contract it was acting as principal while stipulating terms of the contract with Selfridge–but as held by Court, a person can’t contract in two capacities in the same agreement. Hence, HoL held that Dunlop wasn’t acting as the undisclosed principal of Dew.

3) Dew had the title to goods manufactured by Dunlop independently of any contract with Selfridge. They were free to sell the tyres to anyone they wished. Secondly, the consideration by way of discount was given wholly out of Dew and neither directly nor indirectly out of Dunlop. Neither Dunlop gave any consideration directly to Selfridge nor through Dew as his agent. Further since all the terms of the contract including whether to give any discount to Selfridge or not was solely stipulated by Dew on its own account and not as Dunlop’s agent, therefore HoL unanimously held appellant’s contention that their permitting and enabling Dew, with the knowledge and desire of Selfridge, to sell to the latter on the terms of its contract was consideration moving from Dunlop to Selfridge, as unsustainable.

Author: Vishrut Kansal (National University of Juridical Sciences, Kolkata)