Shanklin Pier Ltd v Detel Products Ltd 06 Jul 1951 [1951] 2 KB 854, KBD

Pier owners specified contractors use a particular paint based on the manufacturer's direct assurances of its quality. When the paint failed, the owners successfully sued the manufacturer for breach of warranty, despite not buying the paint themselves, establishing a collateral contract.

Facts

The plaintiffs, Shanklin Pier Ltd., engaged contractors, George Tate & Son Ltd., to repaint their pier. The contract allowed the plaintiffs to specify the paint to be used. The defendants, Detel Products Ltd., were paint manufacturers who represented to the plaintiffs that their paint, D.M.U., was suitable for repainting the pier and would last for seven to ten years. Relying upon this express warranty, the plaintiffs amended the contract with their contractors to specify that two coats of D.M.U. paint must be used. The contractors subsequently purchased and applied the D.M.U. paint as specified. However, the paint proved to be a failure, peeling off within three months. The plaintiffs incurred significant costs in stripping the defective paint and repainting the pier, and brought an action against the defendants for damages for breach of warranty.

Issues

The primary legal issue was whether the plaintiffs could maintain an action for breach of warranty against the defendants, given that the contract for the purchase of the paint was between the defendants and the contractors, not the plaintiffs. The court had to determine if a separate, enforceable collateral contract existed between the plaintiffs and the defendants.

Judgment

McNair J. found in favour of the plaintiffs, holding that a collateral contract had been formed and the defendants were liable for its breach.

Arguments Presented

The plaintiffs argued that the defendants’ representations about the paint constituted an express warranty. The consideration for this warranty was the plaintiffs’ act of specifying D.M.U. paint in their contract with the contractors, thereby causing the contractors to enter into a contract to purchase the paint from the defendants. The defendants denied giving any warranty and contended that, in any event, there was no privity of contract between themselves and the plaintiffs upon which a claim could be founded. They argued that any contract of sale was with the contractors alone.

Reasoning of the Court

McNair J. accepted the plaintiffs’ argument. He found that the statements made by the defendants were intended to have contractual effect and were not mere representations. The judge held that a collateral contract had come into existence, the consideration for which was the plaintiffs instructing their contractors to buy the defendants’ paint. This act of instruction was a sufficient detriment to the plaintiffs and benefit to the defendants to constitute good consideration. The judge reasoned that the law permits such a contract to exist, citing legal principles that a promise made to one party can be supported by the consideration of that party causing a third party to enter into a contract with the promisor. McNair J. stated:

In the present case the plaintiffs say: “If you will promise us that your paint is a good paint and suitable for our pier, we will on our side specify that the contractors shall use your paint.” That seems to me to be a plain case of a warranty given to the plaintiffs, the consideration for which was that the plaintiffs should cause the contractors to enter into a contract with the defendants for the supply of the paint for the pier. … I see no reason why there may not be an enforceable warranty between A and B supported by the consideration that B causes C to enter into a contract with A or that B enters into a contract with C.

The judge concluded that the paint was not fit for purpose and that its failure was a direct result of the breach of warranty.

Implications

The decision in Shanklin Pier Ltd v Detel Products Ltd is a significant authority for the doctrine of the collateral contract. It provides a crucial exception to the strict rule of privity of contract, allowing a party who is not a direct party to the main contract to sue for breach of a pre-contractual promise or warranty. The case establishes that where a promise is made by A to B, and in return for that promise B causes C to enter into a contract with A, an enforceable collateral contract exists between A and B.

Verdict: Judgment for the plaintiffs for a sum to be assessed, with costs.

Source: Shanklin Pier Ltd v Detel Products Ltd 06 Jul 1951 [1951] 2 KB 854, KBD