Comment: A stranger to consideration, as well as a stranger to a contract, cannot sue.

Question: Comment: A stranger to consideration, as well as a stranger to a contract, cannot sue. [RJS 1971]

Find the answer to the mains question of the Law of Contract only on Legal Bites. [Comment: A stranger to consideration, as well as a stranger to a contract, cannot sue.]

Answer

There is a general rule of law that only the parties to a contract can sue. In other words, if a person is not a party to a contract, he cannot sue. This rule is known as the “Doctrine of Privity of Contract”. Privity of contract means a relationship subsisting between the parties who have entered into contractual obligations. There are two consequences of the doctrine of privity of contract they are following:

1) A person who is not a party to a contract cannot sue even if the contract is for his benefit and he provided consideration. (Or) A stranger to a contract cannot sue.

2) A contract cannot provide rights (or) impose obligations arising under it on any person other than the parties to it. (Or) A stranger to a contract can sue.

The statement "A stranger to consideration, as well as a stranger to a contract, cannot sue" reflects a principle in contract law that generally outlines who has the legal standing to enforce a contract and bring a lawsuit in case of a breach. Let's break down the statement:

Stranger to Consideration: Consideration is a fundamental element of a valid contract. It refers to something of value that each party gives or promises to give to the other as part of the exchange. For a contract to be enforceable, there must be consideration on both sides. A "stranger to consideration" refers to someone who is not a party to the contract and did not provide any consideration for the contract. In other words, this person did not give or promise anything in exchange for the contractual promise.

Stranger to a Contract: This refers to a person who is not a party to the contract. In other words, they are not one of the individuals or entities that entered into the contract agreement.

Based on the principle reflected in the statement:

"A stranger to consideration, as well as a stranger to a contract, cannot sue."

This means that individuals who are neither parties to the contract nor provided any consideration for the contract generally do not have the legal right to sue for the enforcement of the contract or for damages resulting from its breach. In contract law, only the parties who have exchanged consideration and are directly involved in the contract usually have the legal standing to bring a lawsuit if the terms of the contract are violated.

There are, however, exceptions to this general rule. For instance, there are cases where a third party may have a legitimate interest in the contract and could have legal standing to sue under specific circumstances, such as when the contract was made for their benefit (known as a "third-party beneficiary").

The following are the exceptions to the rule that a stranger to a contract cannot sue:-

1. A trust: In a trust, deed beneficiaries are allowed to sue the trustee for enforcement of the trustee’s duties even though they are not contracting parties. However, the name of the beneficiary must be clearly mentioned in the contract.

2. Marriage settlements, Partition (or) other Family Arrangements: When an agreement is made in connection of marriage settlements, partitions (or) other family arrangements and a provision is made for the benefit of a person, he may sue although he is not a party to the agreement.

3. Acknowledgement (or) Estoppel: The person, who becomes an agent of a third party by acknowledgment (or) Estoppel, can be sued by such a third party.

4. Assignment of Contract: Assignment means the voluntary transfer of rights by a person to another. In such a case an assignee becomes entitled to sue and enforce the rights which are assigned to him.

5. Contracts entered into through an agent: The principal enforces the contract entered into by his agent provided the agent acts within the scope of his authority and in the name of the principal.

6. Covenants running with the land: In case of transfer of immovable property, the purchaser of land (or) the owner of the land is bound by certain conditions (or) covenants created by an agreement affecting the land.