CHAR_A01.PDF, page 1-18 @ Normalize ( CHAR_A01.QXD )

We say that there is privity of contract between A and B, but none
between A and C, or between B and C. C has not put anything into the
contract, and is therefore said to be a ‘stranger’ to it. This upholds the idea
of a contract being a bargain, with something to be gained by both sides.
The idea is very closely linked with that of consideration moving from the
promisee (see Tweddle v Atkinson, p. 149), and was affirmed by the House
of Lords in the case of Dunlop Pneumatic Tyre v Selfridge (1915).

Privity of contract 133

A B

C

Privity of contract

(right to sue each other)

Benefit or duty

No privity of contract, so

no right to sue A or B

Figure 9.1

Dunlop Pneumatic Tyre v Selfridge (1915)

Dunlop made Tyres and sold them to Dew, a wholesaler, under a

contract where it was stipulated that the tyres must not be resold below

a certain price. Dew sold tyres on with the same stipulated to Selfridge,

a retailer, who did sell them below that price. Dunlop sued Selfridge,

and who therefore had a right to take action, was Dew, and he did not

wish to sue.

Dunlop Dew

Selfridge

Privity of contract

(right to sue each other)

No privity of

contract no

right for Selfridge to

sue Dunlop

Privity of contract 

right to sue each other

Customer Customer

Customer

Customer

Figure 9.2