Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd
Encyclopedia
Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd [1914] UKHL 1 is an English contract law
case, concerning the extent to which damages may be sought for failure to perform of a contract when a sum is fixed in a contract. It held that only if a sum is of an unconscionable amount will it be considered penal and unenforceable.
It should not be confused with Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd, which held that the same resale price maintenance practice was unenforceable against a third party reseller as a matter of the English rule of privity of contract
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sued its tyre retailer, New Garage, for breaching an agreement to not resell Dunlop tyres at a price lower than that listed in the contract. The agreement then said if that did happen, New Garage would pay £5 per tyre ‘by way of liquidated damages and not as a penalty’.
The judge held the £5 sum was liquidated damages and enforceable. The Court of Appeal held the clause was a penalty and Dunlop could only get nominal damages. Dunlop appealed.
English contract law
English contract law is a body of law regulating contracts in England and Wales. With its roots in the lex mercatoria and the activism of the judiciary during the industrial revolution, it shares a heritage with countries across the Commonwealth , and the United States...
case, concerning the extent to which damages may be sought for failure to perform of a contract when a sum is fixed in a contract. It held that only if a sum is of an unconscionable amount will it be considered penal and unenforceable.
It should not be confused with Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd, which held that the same resale price maintenance practice was unenforceable against a third party reseller as a matter of the English rule of privity of contract
Privity in English law
Privity is a doctrine in English contract law that covers the relationship between parties to a contract and other parties or agents. At its most basic level, the rule is that a contract can neither give rights to, nor impose obligations on, anyone who is not a party to the original agreement, ie a...
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Facts
DunlopDunlop
Dunlop may refer to:In companies:*name derived from John Boyd Dunlop ** Dunlop Tyres, tyre manufacturer since 1985** Dunlop Rubber, manufacturer of tyre and rubber products from 1889 to 1985...
sued its tyre retailer, New Garage, for breaching an agreement to not resell Dunlop tyres at a price lower than that listed in the contract. The agreement then said if that did happen, New Garage would pay £5 per tyre ‘by way of liquidated damages and not as a penalty’.
The judge held the £5 sum was liquidated damages and enforceable. The Court of Appeal held the clause was a penalty and Dunlop could only get nominal damages. Dunlop appealed.