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Paisley Paint Suppliers assured Fort Bridge that the industrial paint they supplied would last for at least five years. On the basis of this assurance, Fort Bridge entered into a contract with Pete's Painters to paint Fort Bridge's Victorian iron rail bridge, and instructed Pete's Painters to use Paisley's paint. Pete's Painters bought the paint from Paisley, as instructed, but after the project was completed, Fort Bridge discovered that the paint was already beginning to peel after just a couple of months.

Can Fort Bridge claim compensation directly from Paisley Paint Suppliers under these circumstances?

No, because Fort Bridge had provided no consideration for the promise given by Paisley Paint Suppliers.

No, because the only contract which Paisley Paint Suppliers had made was to sell paint to Pete's Painters, and Fort Bridge was not a party to that agreement.

Yes, because by Fort Bridge entering into a contract with Pete's Painters, which required them to contract with Paisley Paint Suppliers for the particular paint, a collateral contract came into existence, which meant that there was consideration for the assurance.

No, because the doctrine of privity means that Fort Bridge, as a third party, is denied the effectiveness of a contract, even where that is the expressed intention of the parties.

Yes, but in the absence of evidence to suggest that Pete's Painters suffered any detriment from a failure by Paisley Paint Suppliers to supply suitable paint, Fort Bridge could establish no more than nominal damages.

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Fort Bridge could recover on the basis of a collateral contract. The consideration for the promise regarding the paint's durability was Fort Bridge's instruction to Pete's Painters to purchase the paint from Paisley Paint Suppliers. In Shanklin Pier v Detel Products Ltd [1951] 2 KB 854, the court held that a collateral contract existed where the plaintiff, relying on the defendant's assurance, instructed a contractor to purchase the paint. The consideration for the promise was the instruction to buy the paint from the specific supplier.

Key Point: A collateral contract can exist when an assurance is given to one party who relies on it to instruct another party to enter into a contract with the supplier. This creates enforceable obligations even if the party benefiting from the assurance is not a direct party to the primary contract.

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Contract LawUnit 2Chapter 6: Parties to Contract

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