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A Stranger To A Contract Cannot Sue But A Stranger To A Consideration Can Sue Comment

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Mar 26th, 2012
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Though a stranger to consideration can sue because the consideration can be furnished or supplied by any person whether he is the promisee or not, but a stranger to a contract cannot sue because of the absence of privity of contract (i.e. relationship subsisting between the parties to a contract).

 

Exceptions:
The rule that a stranger to a contract cannot sue, is subject to the following exceptions.

 

(a) In Case of Trusts.

The beneficiary (i.e. the person for whose benefits the trust has been created) may enforce the Contract.

(b) Case of Family Settlement:

The person of whose benefit the provision is made under family arrangements may enforce the Contract.

(c) Acknowledgment:

The person who becomes an agent of third party by acknowledgment or otherwise, can be sued by such third party.

(d) Assignment of a Contract:

Where a benefit under a contract has been assigned, the assignee can enforce the contract subject to all equities between the original parties to the contract e.g. the assignee of an insurance policy.

 


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