Shanklin Pier Ltd v Detel Products Ltd
Citations:  2 KB 854;  2 All ER 471;  2 Lloyd’s Rep 187; (1951) 95 SJ 563; [1947-51] CLY 9204.
The claimants owned a pier which was damaged in WW2. In 1946, they hired a contractor to repair the pier. The defendant’s director met with the claimants to discuss obtaining a contract to provide the necessary paint. He mentioned that a particular kind of paint the defendant manufactured would meet the claimants’ needs. A pamphlet he provided stated that two coats of this paint protected ships from corrosion for over four years. He orally told the claimants’ architect that on a pier, it would last between seven and ten years.
The claimants were impressed, and amended the contract they had with their contractor to specify that they should use the defendant’s paint. The contractor purchased and used that paint from the defendant. However, it turned out to be unsuitable and did not last long.
The claimants sued for breach of contract. The defendant responded that there was no contract between them: the only contract was between the defendant and the contractors. The claimants, they argued, had not provided any consideration for the defendant’s warranties about the paint. The claimant countered that there was a collateral contract between the parties.
- Was there a collateral contract for the warranties between the claimants and defendant?
The Court held in favour of the claimant. The claimant had acted to the defendant’s benefit by inducing the third-party contractor to purchase the paint from them. This was sufficient consideration for the defendant’s warranties.
This Case is Authority For…
Consideration includes acts done to benefit the other party. This includes inducing a third-party to confer a benefit on or contract with the other party.
This case demonstrates the common law rule of privity of contract. If there had not been a collateral contract between the claimants and the defendant, the claimant would have had no rights. This was because they had no common law right to sue for breach of the contract with the third-party contractors.