Privity and third party rights

  • Created by: phoebs.b
  • Created on: 09-04-18 16:51

Twiddle v Atkinson (1861) - the fathers of the intended bride and groom (F1 - the groom's father, F2 - the bride's father) promised each other that each would pay a sum of money to the plaintiff (the groom). The bride's father (F2) failed to pay. Could the groom enforce it? Although the promise was for the plaintiff groom's benefit, he was unable to enforce it because (i) he was not a party to the contract containing the promise, and (ii) he had not provided any consideration to enable him to enforce it. (The consideration for F2's promise was provided by F1). 

Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd (1915) - the claimant sold tyres to Dew & Co. Under the terms of this contract (contract 1) Dew & Co promised not to sell the types at less than list price and to obtain a similar undertaking from trade buyers. In return Dew & Co received a discount from the claimant. Dew & Co sold some tyres to the defendant (contract 2) and the defendant promised Dew & Co to abide by the list price. In breach of this undertaking in contract 2, the defendant sold tyres to customers (e.g. contract 3). The claimant sued the defendant for breach of its undertaking not to sell at below list price. It was held by the House of Lords that the claimant could not succeed because (i) it was not a party to the contract containing that promise made by the defendant (i.e. contract 2); and (ii) the claimant had also not provided any consideration to support the defendant's promise. The discount applied only between the claimant and Dew & Co. 

Dolphin & Maritime & Aviation Services Ltd v Sveriges Angfartygs Assurans Forening, The Swedish Club (2009) - a contract between U (underwriters of vessel involved in collision) and the defendants, with which that vessel was registered, provided for the defendants to pay sums recovered to the claimants, a recovery agent for those underwriters, who would pass these sums on to U. When the defendant paid the sums direct to U, U has refused to pay the claimants any commission. The claimants therefore sought to enforce the provision in the contract with the defendant, arguing that the contract 'purported to confer a benefit' on the claimant. It was held that the contract was concerned with how payment was to be made to U and the claimant was not a beneficiary of the agreement, albeit it was more convenient for claimant to receive the sums so that it could deduct its commission before passing on the balance. Christopher Clarke J, referring to s1(1)(b) stated:

  • A contract does not purport to confer a benefit on a third party simply because the position of that third party will be improved if the contract is performed. The reference in the section to the term purporting to 'confer' a benefit seems to me to connote that the language used by the parties shows that one of…


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