Exceptions To The Doctrine Of Privity Of Contract 6g3b43

Exceptions to the doctrine of privity of contract By, Megha R Ajit Reg no: 1712135 Course: 1 Bcom F&A

“An agreement enforceable by law is a contract.” The Indian Contract Act, 1872 was ed by the British India and contains the law relating to contracts that occur in India. It is based on the principles of English Common Law and is applicable to all the states in India except Jammu and Kashmir. It states the circumstances under which the promises made by the parties to a contract shall be legally binding and the enforcement of these rights and duties. The Act originally contained 266 sections and was later converted into two parts: Part 1 deals with the General Principles of Law of Contract (Sections 1 to 75) Part 2 deals with Special kinds of Contracts such as (a) Contract of Indemnity and Guarantee (b) Contract of Bailment and Pledge (c) Contract of Agency For this assignment, I’ll be focusing the rule “Doctrine of Privity of Contract” and its exceptions. What is Privity of Contract? Privity of Contract is the relationship that exists between the parties to an agreement. If you want to file a lawsuit involving a contract, you need proof that you and the other person were in privity of contract or that you were both involved in the contract and had established a win-win situation or a contractual relationship. Let’s take an example. Imagine you’ve visited a supermarket or a bakery nearby and purchase a frozen meal and later that day you consume it but get sick because the food was filled with bacteria. You sue the supermarket or the bakery for selling this product and the manufacturer for not taking proper precautions but also you wish to sue the middleman who delivered the product from the manufacturer to the supermarket or the bakery. This would be a potential problem because you were not in privity of contract with the middleman and had no direct with him as he did not sell or manufacture or market this item to you.

Exceptions to Privity of Now let’s take a look at some of the exceptions to privity of contract. This means that even though someone was not directly involved in the contract, he/she might still be able to sue the partied involved. For example, in case of a trust beneficiary, who is the person who receives assets from a trust, can sue the trustee, who oversees the trust and gives pout the asset in accordance of the contract undertaken by him, if the trustee is not following the rules of the contract. Next, we have property exceptions. For instance, there’s a term called restrictive covenant which require the buyer to either take or abstain from a specific action. In other words, no matter who buys the property, that buyer has to abide by the restrictions on the property. Let’s take a look at an example for restrictive covenant. A restrictive covenant would be a situation where your neighbour has a right of use on your property on a part of the land. Even though you don’t have a contract with that neighbour, the covenant is still enforceable as if both the neighbour and the owner had a contractual relationship. Then there is assignments of contract that can be valued as an exception. In this case, the party who enters into the contract can give the power to sue the other party to another person. This happens only when the original party in the contract transfers or shifts all of their rights to another third person. This puts the third person in place of the original party and therefore allows the third person to file a lawsuit or sue the other person based on the contract drawn. Lastly, we have an exception in case of family settlement. When certain arrangements are made for maintenance or marriage of a particular member of the family then the person for whose benefit the provision is made may enforce the contract. For example, two brothers, on partition of t property, agreed to invest a certain sum of money, in equal shares, to take of their mother. Later, the brothers decide to not use that fund. Held, mother was entitled to recover from her sons such amount that was invested by the sons.

The following are some examples for exceptions to privity of contract. X promised, the secretary of a Mosque Committee, to subscribe a sum of Rs.500 for rebuilding a mosque, but he failed to pay the promised subscription. Y filed a suit against A for the recovery of the promised subscription. It was held by the court that there was no consideration either in the sense of any benefit or advantage to the promisor X, or detriment or loss to the promise, Y, and so, the agreement was void and unenforceable. Kumar promised a trust to donate a sum of Rs.5,000 for the construction of a temple. The trust of the temple, on the faith of Kumar’s promise entered into a construction contract with Super Builders for the construction of the temple. Later, Kumar refused to pay the amount. Held, Kumar was liable to pay to the extent of detriment incurred by the promise subject to the maximum amount promised as the trust had incurred a liability on his faith. [Kedarnath vs. Gauri Mogamed] A husband who was separated from his wife executed a separation deed by which he promised to pay to the trustees, all the expenses for the maintenance of his wife. Held, the agreement created a trust in favour of his wife and wife could claim such amount though not a party to the contract. Mr.A had a son Mr.X and Mr.B had a daughter Mis.Y. A agreed with B that in consideration of the marriage of Y with X, he would pay to Y, his daughter-in-law, an allowance of 500 a month in perpetuity. Layer on Y claimed 500 from A which A refused to pay. Held, Y although not a party to the agreement between A and B, was clearly entitled to recover the arrears of the allowance.