Advanced Contract Law Lecture 3a 13/10/19
Third Parties
> Can someone who is not part of the contract gain rights from it? No because they are not
privy to it. (Consider position pre and post the 1999 Act)
> Can a contract place an obligation on someone who is neither offeror or offeree?
Privity: Identifying the Parties
• Consideration and Privacy are not the same, but consideration may be illustrative of
whether Privity of Contract exists.
o Tweddle v Atkinson (1861) 1 B&S 393- Fathers of bride/groom promised each other that
they will each pay a certain amount of money to them. Groom sues as they failed to pay.
Grooms action failed because the groom was not a party to the contract e.g. offeror or
offeree. He had given no consideration so had no privity- also social and domestic.
o Dunlop v Selfridge (1915) HL - see particularly Lord Haldane
Dunlop sells Dew tyres at a good price and promise not to sell them on below retail price-
Dew can get good profit on them. Dew enters into an agreement with Selfridge and also said
not to discount the tyres. Selfridge sells tyres to customer below list price. Dunlop action
failed because he had no privity with Selfridge.
o BBC v Harper Collins [2010] EWCA 2424- a person purporting to be the (second) stig wrote
memoirs to Harper, each year the identity clause would be in the contract with BBC.
Publications should not go ahead and there should be an injunction because it breached the
contract. Harper was not party to this contract so the BBC could not show privity.
Dunlop v Selfridge (1915)
Dunlop--(1)--Dew--(2)--Selfridge--(3)—Customer
1) Dunlop sold to Dew with term that not sell at less than list, and if sell on, inc term. In return Dew
given discount.
2) Dew sold to Selfridge, who promised to keep to the price list (term of contract)
3) S then sold tyres to customer below list price.
Problems re non enforcement to intended third party beneficiaries
• Intention of the contracting parties- to give third parties rights
• Unjust to third party
• ’Black hole’ problem- no legal solution
• Inconsistencies with court approaches
Implications of perspectives on Consideration
Qu consideration must move from promise?
Coulls v Bagot’s Executor & Trustee Co. Ltd(1967)- Australian Case persuasive only
o 4/5 judges were in agreement, fed into the Law Commissions. Influenced the shape of the
legislation.
Third Parties
> Can someone who is not part of the contract gain rights from it? No because they are not
privy to it. (Consider position pre and post the 1999 Act)
> Can a contract place an obligation on someone who is neither offeror or offeree?
Privity: Identifying the Parties
• Consideration and Privacy are not the same, but consideration may be illustrative of
whether Privity of Contract exists.
o Tweddle v Atkinson (1861) 1 B&S 393- Fathers of bride/groom promised each other that
they will each pay a certain amount of money to them. Groom sues as they failed to pay.
Grooms action failed because the groom was not a party to the contract e.g. offeror or
offeree. He had given no consideration so had no privity- also social and domestic.
o Dunlop v Selfridge (1915) HL - see particularly Lord Haldane
Dunlop sells Dew tyres at a good price and promise not to sell them on below retail price-
Dew can get good profit on them. Dew enters into an agreement with Selfridge and also said
not to discount the tyres. Selfridge sells tyres to customer below list price. Dunlop action
failed because he had no privity with Selfridge.
o BBC v Harper Collins [2010] EWCA 2424- a person purporting to be the (second) stig wrote
memoirs to Harper, each year the identity clause would be in the contract with BBC.
Publications should not go ahead and there should be an injunction because it breached the
contract. Harper was not party to this contract so the BBC could not show privity.
Dunlop v Selfridge (1915)
Dunlop--(1)--Dew--(2)--Selfridge--(3)—Customer
1) Dunlop sold to Dew with term that not sell at less than list, and if sell on, inc term. In return Dew
given discount.
2) Dew sold to Selfridge, who promised to keep to the price list (term of contract)
3) S then sold tyres to customer below list price.
Problems re non enforcement to intended third party beneficiaries
• Intention of the contracting parties- to give third parties rights
• Unjust to third party
• ’Black hole’ problem- no legal solution
• Inconsistencies with court approaches
Implications of perspectives on Consideration
Qu consideration must move from promise?
Coulls v Bagot’s Executor & Trustee Co. Ltd(1967)- Australian Case persuasive only
o 4/5 judges were in agreement, fed into the Law Commissions. Influenced the shape of the
legislation.
