Friday, 3 June 2022

Exception of privity to Contract

 Exceptions of Privity of Contract

By: Robin Pandey Date: 27/02/2022

1. Beneficiaries under trust or charge: Where a trust is created by a contract, a

beneficiary may enforce the rights which the trust so created has given him though not a party to

the contract. Similarly, a beneficiary can enforce a charge though not a party to the deed. In Khwaja

Muhammad Khan v. Hussani Begam (1910), an agreement was executed between a boy's father

and a girl's father that the former would pay to the girl a certain sum of money as Kharch-i-pandan

in perpetuity in consideration of the girl's marriage with the boy. The girl and the boy were both

minors at that time. Certain properties were also charged for the payment of the money. After 19

years owing to differences the lady left her husband's home and filed a suit against her father-in-law

for the recovery of arrears of the annuity. It was held that the lady was entitled to proceed in equity

to enforce her claim. In Rana Uma Nath Baksh Singh v. Jang Bahadur, the appellant was appointed

by his father as his successor. He was given the possession of the entire estate. In consideration

thereof the appellant agreed with his father to pay a certain sum of money and to give a village to

the illegitimate son of his father, on his attaining majority. It was held that the illegitimate son was

entitled to claim the specified amount and the village as a trust was created in his favour. In Post

Master General v. Ram Kirpal Sahu, it was held that an addressee of insured article can claim

compensation from the Central Government on non-delivery of insured articles as a constructive

trust is created in his favour.

2 Marriage settlement, partition or other family arrangements: In case of family

arrangements if a provision is made for the benefit of a person, he may enforce the agreements

although he is not a party to it. Section 15 of the Specific Relief Act, 1963 provides that where the

contract is a settlement on marriage, or a compensation of doubtful rights between members of the

same family, any person beneficially entitled there under may obtain specific performance. In Rose

Fernandez v. Joseph Gonsalves, a girl's father agreed to marry her with the defendant. It was held

that the girl after attaining majority was entitled to sue the defendant for damages for the breach of

promise of marriage. In Shuppu Ammal v. Subramaniyam , on partition of a Hindu Undivided Family

two brothers agreed to invest Rs. 300 each for the maintenance of their mother. The mother was

held entitled to sue to enforce the agreement though she was not a party to the contract.

In Sundaraja Aiyangar v. Lakshmi Ammal, a provision was made for the marriage expenses of a

female member of a Hindu Undivided Family at the time of partition of the HUF. The agreement was

made between male members of the HUF. It was held that the female member was entitled to sue

to enforce the agreement. In Daropati V. Jaspat Rai, the defendant's wife deserted him due to his

cruelty. He then Promised her father to treat her properly and in case of his failure to treat Properly

he would pay her monthly maintenance and to provide her a dwellings We was again ill treated and

driven out. It was held that the wire was citied to enforce the promise made by the defendant to her


3. Acknowledgement or estoppel: If a person is required under the terms of a contract, to

pay a certain sum of money to a third person and he acknowledges it to that person, he becomes

bound to pay the money to the third person. In Devaraja Urs. v. Ram Krishnaiah, a person sold a

house. He left the sale price in the hands of the buyer for payment to a creditor. The buyer made

part payment to the creditor, promising to pay the balance soon. It was held that the creditor was

entitled to sue the buyer for recovering the balance.

4. Agency: If A has made contract with B, C may intervene and take A's place if he can show that

A was acting throughout as his agent even though B entered into the contract in ignorance of this

fact. Thus undisclosed principal has the right to sue a third party. But this right, as provided in

section 232 is subject to the rights and obligations subsisting between the agent and the third party.

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