Privity of Contract

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A stranger to a contract can’t sue…!!!! Submitted by:- Ankit Bhardwaj
M.B.A. III sem. The basic answer to this question is ‘NO’, as the following literature supports and explains this fact effectively.

A contract is an agreement between two or more parties that creates an obligation to do or not to do something. The parties to the contract are under an obligation to perform the terms and conditions as laid down in the contract. Thus a contract can confer rights or impose obligations arising under the contract on the parties to the contract. Third parties cannot be under such an obligation to perform or demand performance under a contract. This is referred to as Privity of contract.

The Doctrine of Privity of Contract under English Law

The doctrine of “Privity of Contract” which means that a contract is a contract between the parties only and no stranger to the contract can sue even if the contract is avowedly made for his benefit. Thus a stranger to the consideration cannot sustain the action on the promise made between two persons unless he has in some way intervened in the agreement.

As the plaintiff was to be married to the daughter of G and in consideration of this intended marriage G and the plaintiff’s father entered into a written agreement by which it was agreed that each would pay the plaintiff a sum of the money. G failed to do so and the plaintiff sued his executors. Thus, although the sole object of the contract was to secure a benefit to the plaintiff, he was not allowed to sue as the contract was made with his father and not with him

The two basic principles under the English Law as can be ascertained from the above cases are that firstly consideration should move from the promisee only and secondly that a contract cannot be enforced by a person who is not a party to...
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