Contract Law

Beswick v. Beswick

[1968] AC 58

Facts

Peter Beswick transferred his coal-merchant business to his nephew.
The nephew promised:
to pay Peter a weekly sum during Peter’s lifetime;
after Peter’s death, to pay Peter’s widow £5 per week for life.
Peter died.
The nephew made one payment to the widow and then stopped.
The widow sued:
personally, as the intended third-party beneficiary; and
as administratrix of Peter’s estate.
The nephew relied on privity and argued that she personally could not enforce the promise.

Whether the widow could enforce the contract as a third-party beneficiary.
Whether specific performance could be ordered at the instance of the deceased promisee’s estate.

Under the traditional privity rule, a third-party beneficiary cannot sue personally on a contract to which they are not a party.
However, the promisee or the promisee’s estate may enforce the promisor’s obligation.
Specific performance may be granted where:
damages would be inadequate;
the contractual obligation is clear;
the defendant would otherwise retain the benefit while avoiding the promised burden.
Nominal damages are not necessarily the only remedy available to the promisee’s estate.

Mrs Beswick personally was not a contracting party.
Therefore, traditional privity prevented her from recovering in her individual capacity.
However, as administratrix, she represented Peter’s estate.
Peter had supplied consideration by transferring the business.
The nephew had obtained the full commercial benefit of that transfer.
The estate therefore had a valid contractual right to enforce the promise.
Damages would be inadequate because:
the estate itself suffered little measurable financial loss;
nominal damages would allow the nephew to keep the business without making the promised payments;
the contract specifically contemplated continuing weekly support for the widow.
Specific performance ensured that the actual obligation undertaken was fulfilled.
The remedy did not give the widow an independent third-party contractual right; it enforced the estate’s contractual right for her benefit.

Mrs Beswick could not sue personally because of privity.
As administratrix, she obtained specific performance requiring the nephew to pay the weekly annuity.
Use this case for: the promisee’s estate may obtain specific performance of a promise intended to benefit a third party where damages are inadequate.