{"id":3913,"date":"2020-03-11T15:05:31","date_gmt":"2020-03-11T15:05:31","guid":{"rendered":"https:\/\/commerceiets.com\/?p=3913"},"modified":"2020-03-11T15:05:31","modified_gmt":"2020-03-11T15:05:31","slug":"stranger-to-contract","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/stranger-to-contract\/","title":{"rendered":"STRANGER TO CONTRACT"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_72 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/stranger-to-contract\/#STRANGER_TO_CONTRACT\" title=\"STRANGER TO CONTRACT\">STRANGER TO CONTRACT<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/stranger-to-contract\/#ESSENTIALS_OF_STRANGER_TO_CONTRACT\" title=\"ESSENTIALS OF STRANGER TO CONTRACT\">ESSENTIALS OF STRANGER TO CONTRACT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/stranger-to-contract\/#EXCEPTIONS_TO_DOCTRINE_OF_PRIVITY_OF_CONTRACT_STRANGER_TO_CONTRACT\" title=\"EXCEPTIONS TO DOCTRINE OF PRIVITY OF CONTRACT\/ STRANGER TO\nCONTRACT\">EXCEPTIONS TO DOCTRINE OF PRIVITY OF CONTRACT\/ STRANGER TO\nCONTRACT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/stranger-to-contract\/#1_TRUST_OR_CHARGE\" title=\"1. TRUST OR CHARGE\">1. TRUST OR CHARGE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/stranger-to-contract\/#2_MARRIAGE_SETTLEMENT_PARTITION_OR_OTHER_FAMILY_ARRANGEMENTS\" title=\"2. MARRIAGE SETTLEMENT, PARTITION OR OTHER FAMILY ARRANGEMENTS\">2. MARRIAGE SETTLEMENT, PARTITION OR OTHER FAMILY ARRANGEMENTS<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/commerceiets.com\/stranger-to-contract\/#3_ACKNOWLEDGEMENT_OF_PAYMENT\" title=\"3. ACKNOWLEDGEMENT OF PAYMENT\">3. ACKNOWLEDGEMENT OF PAYMENT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/commerceiets.com\/stranger-to-contract\/#4_AGREEMENTS_AFFECTING_THE_LAND\" title=\"4. AGREEMENTS AFFECTING THE LAND\">4. AGREEMENTS AFFECTING THE LAND<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/commerceiets.com\/stranger-to-contract\/#5_AGENCY\" title=\"5. AGENCY\">5. AGENCY<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/commerceiets.com\/stranger-to-contract\/#6_ASSIGNMENT\" title=\"6. ASSIGNMENT\">6. ASSIGNMENT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/commerceiets.com\/stranger-to-contract\/#7_HOLDER_IN_DUE_COURSE\" title=\"7. HOLDER IN DUE COURSE\">7. HOLDER IN DUE COURSE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/commerceiets.com\/stranger-to-contract\/#8_FUND_IN_HANDS_OF_A_PARTY\" title=\"8. FUND IN HANDS OF A PARTY\">8. FUND IN HANDS OF A PARTY<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"stranger-to-contract\"><span class=\"ez-toc-section\" id=\"STRANGER_TO_CONTRACT\"><\/span><strong>STRANGER TO CONTRACT<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The stranger to contract is a doctrine which means privity of&nbsp;contract. It means that a person, who is not a party to the <a href=\"https:\/\/commerceiets.com\/indian-contract-act-1872\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"contract (opens in a new tab)\">contract<\/a>, cannot sue for carrying out the promise made by the parties to the contract. That is, a person who is not a party to the contract cannot enforce a contract.<\/p>\n\n\n\n<p>The\nunderlying principle of the doctrine is that a contract is always a privity\nrelationship between the parties who make it. No other person can acquire\nrights or incur liabilities under it.<\/p>\n\n\n\n<p><strong>Example<\/strong>:\nManufacturer <strong><em>A<\/em><\/strong> supplied tyres to a wholesaler,&nbsp;<strong><em>B<\/em><\/strong>, on\ncondition that any retailer to whom&nbsp;<strong><em>B<\/em><\/strong>&nbsp;resupplied the\ntyres should promise&nbsp;<strong><em>B<\/em><\/strong>&nbsp;not to sell them to the public\nbelow Manufacturer A\u2019s list price.&nbsp;<strong><em>B<\/em><\/strong>&nbsp;supplied tyres\nto&nbsp;<strong><em>C<\/em><\/strong>&nbsp;upon this condition, but nevertheless&nbsp;<strong><em>C<\/em><\/strong>&nbsp;sold\nthem below the list price. Held, there was a contract between&nbsp;<strong><em>C<\/em><\/strong>&nbsp;and&nbsp;<strong><em>B<\/em><\/strong>,\nand a contract between Manufacturer A and&nbsp;<strong><em>B<\/em><\/strong>, but no contract\nbetween Manufacturer A and&nbsp;<strong><em>C<\/em><\/strong>. Therefore, Manufacturer A\ncould not obtain damages from&nbsp;<strong><em>C<\/em><\/strong>.<\/p>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"essentials-of-stranger-to-contract\"><span class=\"ez-toc-section\" id=\"ESSENTIALS_OF_STRANGER_TO_CONTRACT\"><\/span><strong>ESSENTIALS OF STRANGER TO CONTRACT<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The following are the various essentials of stranger to\ncontract:<\/p>\n\n\n\n<ol class=\"wp-block-list\"><li><strong>A contract\nhas been entered into between two parties:&nbsp;<\/strong>The\nmost important essential is that there has been a contract between two or more\nparties.<\/li><li><strong>Parties\nmust be competent and there should be a valid consideration<\/strong>:\nCompetency of parties and the existence of consideration are pre-requisites for\napplication of this doctrine.<\/li><li><strong>There\nhas been a breach of contract by one party:&nbsp;<\/strong>Breach\nof contract by one Party is the essential requirement for the application of\nthe doctrine of privity of contract.<\/li><li><strong>Only\nparties to contract can sue each other:&nbsp;<\/strong>Now after the\nbreach, only Parties to a contract are entitled to sue against each other for\nnon-performance Of contract.<\/li><\/ol>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"exceptions-to-doctrine-of-privity-of-contract-stranger-to-contract\"><span class=\"ez-toc-section\" id=\"EXCEPTIONS_TO_DOCTRINE_OF_PRIVITY_OF_CONTRACT_STRANGER_TO_CONTRACT\"><\/span><strong>EXCEPTIONS TO DOCTRINE OF PRIVITY OF CONTRACT\/ STRANGER TO\nCONTRACT<\/strong><strong><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>There are, certain exceptions to the rule of privity of contract recognized both by the English Law and the Indian Law, under which a person, who is not a party to a contract can sue on it. The exceptions to the rule are:<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2020\/03\/STRANGER-TO-CONTRACT-1.jpg\" alt=\"\" class=\"wp-image-3915\"\/><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"1-trust-or-charge\"><span class=\"ez-toc-section\" id=\"1_TRUST_OR_CHARGE\"><\/span><strong>1. TRUST OR CHARGE<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Sometimes under contract, a benefit is given to a person\nwho is not a party to the contract. This benefit can be given by creating a\nTrust or Charge in favour of such person. In such cases, the beneficiary under\nthe trust or charge may enforce the contract even though he is not a party to\nit.<\/p>\n\n\n\n<p><strong><em>CASE: KHWAJA MOHD. VS HUSAINI BEGUM\n(1910)<\/em><\/strong><\/p>\n\n\n\n<p>A had a son S and B had a daughter D. A\nagreed with B that in consideration of the marriage of D with S, he would pay\nto D, his daughter in law an allowance of 5000 a month in perpetuity. He\ncharged certain properties with the payment with the power to D to enforce it.\nIn this case, court held that, D although no party to the arrangement, was\nclearly entitled to recover the arrears of the allowance.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"2-marriage-settlement-partition-or-other-family-arrangements\"><span class=\"ez-toc-section\" id=\"2_MARRIAGE_SETTLEMENT_PARTITION_OR_OTHER_FAMILY_ARRANGEMENTS\"><\/span><strong>2. MARRIAGE SETTLEMENT, PARTITION OR OTHER FAMILY ARRANGEMENTS<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Sometimes, an agreement is made in connection with\nmarriage, partition or other family arrangements and a provision is made for\nthe benefit of some person. In such cases, a person, for whose benefit the\nprovision is made, can enforce the agreement though he is not a party to it.<\/p>\n\n\n\n<p><strong>EXAMPLE: <\/strong>J&#8217;s wife deserted him because of his ill\ntreatment. J entered into an agreement with his father in law to treat her\nproperty or else pay her monthly maintenance, subsequently, she was again ill\ntreated and also driven out, here she was entitled to enforce the promise made\nby J to her Father.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"3-acknowledgement-of-payment\"><span class=\"ez-toc-section\" id=\"3_ACKNOWLEDGEMENT_OF_PAYMENT\"><\/span><strong>3. ACKNOWLEDGEMENT OF PAYMENT<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Sometimes, one of the parties to a contract acknowledges\nthe payment to a third party or otherwise constitutes himself as an agent of\nthe third party. In such cases, the party incurs a binding obligation towards\nthe third party who can enforce it. And if that party acknowledges the payment\nto the third person or constitutes himself as an agent of that third person,\nthen the third person can recover the amount from such a party.<\/p>\n\n\n\n<p><strong>EXAMPLE:&nbsp;<\/strong>&nbsp;A receives some money from\nB&nbsp;to be paid over C. A admits of this receipt to C. C can recover the\namount from A who shall be regarded as the agent of C.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"4-agreements-affecting-the-land\"><span class=\"ez-toc-section\" id=\"4_AGREEMENTS_AFFECTING_THE_LAND\"><\/span><strong>4. AGREEMENTS AFFECTING THE LAND<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Sometimes, the owner of land is entitled to certain\nrights and obligations created by an agreement relating to the land. If such\nland is purchased by somebody with the notice of rights and obligations of the\nowner, then those rights and obligations shall bind the purchaser although he\nwas not a party to the agreement.<\/p>\n\n\n\n<p><strong>EXAMPLE:<\/strong> Peter owned a piece of land which he sold to John under a covenant that\na certain part of the land will be maintained as a public park. John abided by\nthe covenant and eventually sold the land to Arjun. Though Arjun was aware of\nthe covenant, he built a house in the specific plot. When Peter came to know of\nit, he filed a suit against Arjun. Although Arjun denied liability since he was\nnot a party to the contract, the Court held him responsible for violating the\ncovenant.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"5-agency\"><span class=\"ez-toc-section\" id=\"5_AGENCY\"><\/span><strong>5. AGENCY<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A principal, even if concealed, may sue on a contract\nmade by an agent. The third party cannot plead that there was no contract\nbetween him and the principal.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"6-assignment\"><span class=\"ez-toc-section\" id=\"6_ASSIGNMENT\"><\/span><strong>6. ASSIGNMENT<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The assignee of a debt or an actionable claim may sue the\noriginal debtor if the assignment is a legal one. It is important to note here that nominees of a life&nbsp;insurance&nbsp;policy do not have this right.<\/p>\n\n\n\n<p><strong>EXAMPLE: <\/strong>Where a bill\nof exchange is transferred to a third party, that a third party can enforce the\nbill of exchange even though he was not a party of it.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"7-holder-in-due-course\"><span class=\"ez-toc-section\" id=\"7_HOLDER_IN_DUE_COURSE\"><\/span><strong>7. HOLDER IN DUE COURSE<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A&nbsp;holder in due course&nbsp;of\na negotiable instrument is one who has obtained the negotiable instrument in\ngood faith and for valuable consideration. He can sue prior parties to the\nnegotiable instrument.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"8-fund-in-hands-of-a-party\"><span class=\"ez-toc-section\" id=\"8_FUND_IN_HANDS_OF_A_PARTY\"><\/span><strong>8. FUND IN HANDS OF A PARTY<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Where a fund is created in the hands of one of the contracting parties in favor of a third party, it may be possible to give the latter, a remedy in quasi-contract on the grounds that to allow the contracting party to keep the fund would be to allow unjust enrichment.<\/p>\n\n\n\n<p><strong>JOIN THE CHANNEL ON TELEGRAM<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/t.me\/commerceiets\" target=\"_blank\">https:\/\/t.me\/commerceiets<\/a><\/p>\n\n\n\n<p><strong>CONNECT ON LINKEDIN<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noopener\">https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>STRANGER TO CONTRACT The stranger to contract is a doctrine which means privity of&nbsp;contract. It means that a person, who is not a party to the contract, cannot sue for carrying out the promise made by the parties to the contract. That is, a person who is not a party to the contract cannot enforce&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/stranger-to-contract\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;STRANGER TO CONTRACT&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":3917,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":["post-3913","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-commercial-law"],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3913","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=3913"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3913\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/3917"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=3913"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=3913"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=3913"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}