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  • Read the following passage carefully and answer the question It is a well-settled rule of English Law that “Consideration must move from the promisee alone”.

Read the following passage carefully and answer the question

It is a well-settled rule of English Law that “Consideration must move from the promisee alone”. If it is furnished by any other person and not by the promisee himself, the promisee becomes "stranger to consideration", therefore, cannot enforce the promise. This is known as the doctrine of 'Privity of Consideration'. It means that the Act or abstinence or promise constituting the consideration must be done or made by the promisee himself at the request of the promisor (English Law). But the words “promisee or any other person” given in the definition of consideration under Section 2[d] of the Indian Contract Act indicate that consideration need not move from the promisee alone but may proceed from a 3rd person on behalf of the promisee. To that extent, the Indian Contract Act has departed from the rule of English Law. The definition of 'Consideration' under the Indian Law is, therefore, wider than that in the English Law. The rule of Privity of Consideration is not at all applicable in India; in view of the clear language used in Section 2(d), it is not necessary that consideration should be furnished by the promisee only. Here in India, a promise is enforceable if there is some consideration for it, and it is quite immaterial whether it moves from the "promisee or another person.” The leading authority is the decision of the Madras High Court in Chinniya V. Ramaya [(1882) 4 Mad 137]. The rule in India is that consideration shall move from the promisee or any other person. Secondly, failure to keep a promise would have deprived the plaintiff ‘P’ of an amount which he was already receiving from the old lady (before the gift of the property was made) and if a promise causes some loss to the promisee that is sufficient consideration by the promisee. Thirdly, the deed of gift and the defendant's promise to pay the annuity were executed simultaneously on the same day and, therefore, they should be regarded as one transaction, and there was sufficient consideration for that transaction. Therefore defendant 'B' was bound to pay. Although the defendant contended that since the plaintiff 'P' himself had furnished no consideration, he had no right of action against her to claim annuity, i.e., the defendant pleaded, Privity of Consideration of English Law. But her action/suit was not accepted by the Court, and it was held that the English doctrine of Privity of Consideration is not applicable in India.

 Question

Raj transferred Rs.10 Lakh to Rakesh to hold it in trust for his son named Aman, however after the death of Raj, Rakesh refused to pay Raj's son the amount, Decide.

 

Option: 1

Aman can file suit for recovery of the amount

 


Option: 2

Aman cannot file suit for recovery of the amount

 


Option: 3

The acceptance of suit would be at the discretion of the Court

 


Option: 4

The acceptance of the suit would be at the discretion of Rakesh


Answers (1)

best_answer

An exception to the doctrine of privity of contract is when trust has been created for the benefit of a third party, then in this scenario, the person for whose benefit the trust has been created can sue the other party for breach of contract.

Hence, option (a) is correct.

 

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