It established that an agreement for resale price maintenance was unenforceable as a matter of privity of contract.

[1] It should not be confused with Dunlop Pneumatic Tyre Co Ltd v New Garage & Motor Co Ltd,[2] a separate decision of the House of Lords in the preceding year relating to substantially the same resale price maintenance agreement but ruling on the concept of liquidated damages.

If retailers did sell below the list price, they would have to pay £5 per tyre in liquidated damages to Dunlop.

When Selfridge sold the tyres at below the agreed price, Dunlop sued it for breach of contract by injunction and claimed damages.

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.