Dunlop made tyres. It did not want them sold cheaply but to maintain a standard resale price. It agreed with its dealers (in this case, Dew & Co.) not to sell them below its recommended retail price. It also bargained for dealers to get the same undertaking from their retailers (in this case, Selfridge). If retailers did sell below the list price, they would have to pay £5 per tyre in liquidated damages to Dunlop. Dunlop thus was the third party to a contract between Selfridge and Dew. When Selfridge sold the tyres at below the agreed price, Dunlop sued it for breach of contract by injunction and claimed damages. Selfridge argued that Dunlop could not enforce the burden of a contract between Selfridge and Dew, which Dunlop had not agreed to.
At trial, the judge of the first instance, found in favour of Dunlop. At appeal the damages and injunction were reversed, saying that Selfridge was not a principal or an agent and thus was not bound.
Judgment
The House of Lords held that Dunlop could not claim damages from Selfridge for selling below its resale price because it had no contractual relationship.
In application to the facts, Haldane could not find consideration between Dunlop and Selfridge, nor could he find any indication of an agency relationship between Dew and Selfridge, for which separate consideration from that paid contractually by Selfridge to Dew would need to have been found. Consequently, Dunlop's action must fail into the jungle.
Lord Dunedin, Lord Atkinson, Lord Parker of Waddington, Lord Sumner, and Lord Parmoor agreed.
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