privity of contract
A contract creates rights and obligations only between its parties. A third person, even if the contract was made for his benefit, generally cannot sue on it (Dunlop v. Selfridge, House of Lords, 1915). Indian courts follow this rule, though Indian law differs on privity of consideration.
Recognised exceptions include: a beneficiary under a trust or charge created by the contract; provisions for marriage expenses or maintenance in family arrangements; acknowledgment or estoppel, where the promisor has acknowledged the third party's right; contracts made through an agent; assignment; and covenants running with land. England has since passed the Contracts (Rights of Third Parties) Act, 1999, but India has no equivalent statute.
Example
The consumer could not sue the manufacturer in contract because of privity of contract, and had to rely on tort or the Consumer Protection Act.
In Indian law
- Jamna Das v. Pandit Ram Autar Pande (Privy Council, 1911): a stranger to a mortgage contract could not sue on it
See also
privity of consideration · contract · agency · consideration
Read more in the study notes
- Privity of contract and of consideration (Contract I)
- Consideration and nudum pactum (Contract I)
- Legal words and their usage: Kidnap to Witness (English)
- Motor insurance: compulsory third-party cover and Claims Tribunals (Insurance Law)
- Marine warranties, voyage, deviation and perils of the sea (Insurance Law)
- Invoices, packing and product liability (International Trade Economics)