Privity of consideration in the law of contracts, there is one general principle that the consideration should be furnished by the promise. In this article, we will discuss the doctrine of privity of consideration.
The Doctrine of Privity of Consideration
The doctrine of privity of consideration means, the consideration must only move from the promisee to the contract, and where the third person does not hold the right to sue and be sued against the parties to the contract.
But, this doctrine is not applicable in India.
As the consideration has been defined in the Indian Contract Act, under section 2(d) When at the desire of the promisor the promissee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or to abstain from doing anything, such act or abstinence or promise is called as a consideration of the promise.
As per the definition, the consideration may be furnished by the promisee or any other person who is not a party to the contract.
This means the consideration agreed by both the parties should be furnished by the promisee or any other person, even the person who is not a party to that contract.
In the case of Chinmaya v/s Ramayya, 1882, this is the leading case to understand what is privity of consideration?
In this case, a woman gifted her property to her daughter, but it is stipulated that some of the money should be paid to her sister and the money should be given per year to her sister. It was held that the sister can enforce the right and take this money.
Here, in the above example, the gift was made between a woman and her daughter but the consideration in the value of money should be given to her sister is the condition precedent.
Difference Between Privity of Contract and Privity of Consideration
Privity of Contract
Privity of Consideration
1. The privity of contract means the stranger to the contract cannot sue against the parties to the contract.
1. The privity of consideration means the consideration should be furnished by the promisee and not by the third person.
2. Privity of contract is applicable in India, although there are some exceptions.
2. Privity of consideration is not applicable in India.
3. In the Indian Contract Act, there is no provision relating to the privity of contract.
3. In the Indian Contract Act, there is no provision relating to the privity of consideration.
4. The privity of contract can be found in English Common Law.
4. The privity of consideration is not followed by the English Common Law.
- Law of Contract – Bare Act 2021 Edition Professional
- The Indian Contract Act 1872 Bare Act 2021 Edition
- Law of Contract & Specific Relief Dr Avtar Singh Latest Edition-2020
- Pollock & Mulla – The Indian Contract Act, 1872
- CONTRACT Paper I – By R.K. Bangia [Edtion 2019 – 2020]
- CONTRACT Paper-II – By R. K. Bangia
- NOTES ON INDIAN CONTRACT ACT 1872: BEST NOTES FOR LAW STUDENTS