A case summary of Beswick v Beswick (1968)
Case name & citation: Beswick v Beswick [1968] AC 58
Year: 1968
Jurisdiction: The House of Lords, UK
What is the case about?
The case of Beswick v Beswick is an English case law that deals with the doctrine of privity of contract and also the rule of specific performance of a contract.
Facts of the case (Beswick v Beswick)
Peter Beswick was a coal merchant. His nephew was assisting him in the said business.
Due to his ill health, Peter Beswick decided to transfer the trade and goodwill of his coal business to his nephew. The transfer was made on the condition that the defendant, his nephew, would employ Peter Beswick as an advisory consultant on a certain payment for the rest of his life. In addition, it was also agreed that after Peter Beswick’s death, the nephew would also pay his uncle’s wife a weekly sum of £5 for the rest of her life. She was not a party to the agreement.
After the death of Peter, the nephew paid Peter Beswick’s wife just once the sum so agreed upon. He then refused to make the other payments.
Peter Beswick’s wife brought an action against the nephew, the defendant. She took an action in the capacity of being her husband’s administrator of the legal estate and also in her personal capacity for claiming the specific performance of the agreement. The arrears of the annuity to be paid by the nephew were to be recovered.
Issues raised
Two important questions were raised before the Courts.
Firstly, since the widow was not a party to the agreement entered into between her husband and the nephew, whether she was entitled to claim the money from the nephew?
Secondly, in the capacity of being an administrator of the legal estate of her husband, could the plaintiff be entitled to claim for an order of specific performance for Peter Beswick’s nephew to honor the agreement?
Governing principles
As per the doctrine of privity of contract, only those who are a party to the contract can sue to enforce their rights and obligations under the contract. No third party to the contract, also called a stranger to the contract, can sue.
But there are also a few exceptions to this rule whereby a third party can sue, for example, if he or she is a beneficiary under an agreement to create a trust, where the contract is for the provision for maintenance or marriage under a family arrangement, etc.
In addition, Section 10 of the Specific Relief Act of 1963 states that the specific performance of a contract can be enforced where the damages cannot be determined or when monetary compensation cannot provide adequate relief to the aggrieved party. As a result, if one of the parties terminates the contract and the case falls into one of the above scenarios, specific performance of the contract may be enforced.
In the instant case, the doctrine of privity was first criticized by Lord Denning. He observed that:
“Where a contract is made for the benefit of a third person who has a legitimate interest to enforce it, can be enforced by the third person in the name of the contracting party or jointly with him or, if he refuses to join by adding him as a defendant… because the 3rd person has an interest which the law should protect.
But in appeal, the House of Lords did not approve the approach adopted by Lord Denning. And thus, the doctrine of privity of contract was applied in this case. The third party, i.e., the widow was not allowed to sue in her personal capacity as she was not a party to the contract.
Judgement of the Court in Beswick v Beswick
It was decided that the widow could enforce the promise.
The Court unanimously held that the widow was entitled to claim an order of specific performance in respect of Peter Beswick’s nephew to honor the agreement and pay the required sum. In the capacity of being an administrator of the legal estate of her husband, she was entitled to claim the money owed by Peter Beswick’s nephew.
However, the Court also found that the claim could not be addressed under the personal capacity of Peter Beswick’s widow. Since she was a third party to the contract and was not a party to the original agreement entered into between her husband and the nephew, the claim was not enforceable in her personal capacity.
The House of Lords observed as under:
“The plaintiff lady in her personal capacity has no right to sue but she has a right as an administrator of her husband’s estate to require the defendant (appellant) to perform his obligation under the agreement”.
Hence, the sum was recoverable from the defendant not in the personal capacity of the plaintiff but in her capacity of being an administrator of her husband’s legal estate.
Moreover, the Courts in the instant case granted specific performance of the agreement because it was believed that the compensation for damages alone would not have provided adequate relief to the plaintiff.
List of references:
http://www.nzlii.org/nz/journals/OtaLawRw/1967/11.pdf
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