SUBJECT:BUSINESS LAW

SECTION:HRM

SEMESTER:6

DOCTRINE OF PRIVITY OF CONTRACT:

PRIVITY OF CONTRACT means relation subsisting between parties who have entered into contractual
parties.The general rule is only the parties to contract can sue and be sued

A STRANGER TO CONSIDERATION:ACCORDING to INdian contract act consideration may move from

promisee or any other person(stranger).It means stranger to contract can sue provided he is a party to
the contract.

STRANGER TO CONTRACT: A PERSON WHO IS NOT A party to the contract is called stranger to the
contract.THe stranger to contract cannot sue

EXCEPTION: to the rule" stranger to contract cannot sue"

1.BENEFICIARY IN CASE OF TRUST:Where a trust is created for benefit of some person.he can file a suit to
enforce his right eventhough he is not a party to the contract.

exp: A TRANSFER certain properyto R to be held i trust for the benefit of his Y.Ycan enforce the contract
even though he is not aparty to the contract

2.FAMILY SETTLEMENT:Where on the partition of joint hindu family and partition of joint hindu
property,a provision is made for the maintenance or marriageof female member of the family.such
member has right to enforce the contract even though not a party to contract.

3.ACKNOWLEDGEMENT OF A CONTRACT: WHere the promisor by his conduct or otherwise made other
to BELIEVE that he is the agent of a third party, he cannot be estopped from denying his liability to the
third party arising from a contract.

ASSIGNMENT OF A CONTRACT:A assignee can sue upon the contract if rights under the contract are
assigned.H0lder in due course of a negotiable instrument can realise the amount of the instrument
although he is not aparty to the contract

CONTRACT ENTERED INTO THROUGH AN AGENT: IF THE AGENT act on the behalf of the principal and he
act within the authority given to him.the principal can enforce the the contract entered by the agent.

6.COVENANTS RUNNING WITH THE LAND:In case of transfer of immoveable property,the purchaser of
land with notice that the owner of the land is bound by certain conditions created by an agreement
regarding land shall be bound by them although he was not party to the original agreement.