privity of consideration

English · Contract and commercial

Meaning. The rule that consideration must move from the promisee; Indian law rejects it and lets consideration come from a third person.

In English law, only a person who has given consideration can enforce a promise: consideration must move from the promisee (Tweddle v. Atkinson, 1861). Indian law is different. Section 2(d) of the Contract Act defines consideration as an act or abstinence done “by the promisee or any other person”, so a stranger to the consideration can sue, provided he is a party to the contract.

The leading illustration is Chinnaya v. Ramayya, where a daughter could enforce her promise to pay an annuity even though the consideration (a gift of property) had come from her mother. Keep the two rules apart: India allows a stranger to consideration to sue, but still does not ordinarily allow a stranger to the contract to sue.

Example

Since section 2(d) allows consideration to move from “any other person”, the plaintiff, a stranger to the consideration but a party to the contract, could sue.

In Indian law

s.2(d), Indian Contract Act, 1872
Chinnaya v. Ramayya (Madras High Court, 1882)

privity of consideration

Example

In Indian law

See also

Read more in the study notes