The doctrine of Privity of Contract: In Context to Indian Law

The doctrine of Privity of Contract?

The doctrine of Privity of Contract is a general principle of law. This doctrine provides that a contract cannot confer rights or impose allegations upon any individual who is not a party to the contract.

In 1937, the Law Revision Committee recommended the abolition of this doctrine in its sixth interim report. The position in England regarding the doctrine of Privity of the contract changed with the enactment of The Contracts (Rights of Third Parties) Act, 1999. Section 1(1)(2) of the act states that a third party could enforce the beneficiary clause of the contract. Thus, the common law now recognizes the right of the third parties to execute the contractual terms.

 A party “A” promised “C” to pay Rs. 2300 to the third party “B.” Just in case of any breach of contract, “A” and “C” can sue each other. But, “B” cannot sue the parties. This illustration throws light on the doctrine of Privity of Contract.

 Privity of Contract in Indian Law

The doctrine of Privity of consideration is of the view that only that person who has provided review can enforce a contract and take up any action against it. In the illustration mentioned above, “B” has not paid any consideration on his part, so he cannot sue the parties in case of breach of contract.

The Common Law Doctrine of Privity of Contract--- is applicable in India also. In Jamuna Das v. Ram Autar, A purchase of property contracted with the seller to pay off the mortgage debt. In action brought by the mortgage against the purchaser to recover the mortgage debt, it was held by the Privy Council that he was not entitled to force the contract to compel the purchaser to pay off the debt because he was not a party to the contract.

The mentioned rule was applied by Rankin, C.J. in Krishna Lal v. Promila Bala Devi. The Learner Chief Justice observed that although the definition of consideration contained in Section 2 (d) of the Contract Act is more comprehensive than in English Law yet “there is nothing in Section 2 to encourage the idea that contracts can be enforced by a person who is not a party to the contract”.

It may be noted here that the initial burden to prove the privity of the contract lies on the plaintiff. But where the plaintiff supplies goods to the defendant and the defendant admits receipt, therefore, the burden to prove that there was no privity of contract shifts on the defendant.

This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, Or Religion Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code Legal and Tax shall not be responsible for any errors caused due to human error or otherwise.