News By/Courtesy: Nikshetaa Jain | 28 May 2020 13:52pm IST

HIGHLIGHTS

  • Consideration may be furnished either by the promisor or any other person
  • Tweedle v Atkinson: Doctrine of Privity of Contract was laid down
  • Difference between privity of contract and privity of consideration

Consideration is defined in Section 2(d) of the Indian Contract Act, 1872, as follows: “When at the desire of the promisor, the promisee or any other person has done or abstained from doing, or does or abstains from doing, or promises to do or abstain from doing something, such act or abstinence is called a consideration for the promisee.” Consideration may be furnished either by the promisor or any other person. If there is a consideration for a promise, it is immaterial who has provided it.
In Dutton v Poole, a father intended to sell his woods to provide his daughter with a marriage portion. His son, the defendant, promised that if his father forbore to sell at his request, he would pay the daughter 1000 Euros. The defendant did not pay the amount. He contended that the plaintiff was neither a party to the contract nor interested in the consideration. It was held that the defendant was liable to pay as the whole object of the agreement was to provide the daughter with a portion.
In Tweedle v Atkinson, an agreement was made between a man’s father and his father-in-law that if the man and the woman get married, both the father and father-in-law will give the man a sum of money. The father-in-law failed to pay the amount. It was held that since the boy was not a party to the contract, the defendant was not liable to pay him. A contract is an agreement between the parties only and no third parties can sue upon it even if made for their benefit. This case laid the foundation of the doctrine of ‘privity of contract’.
In Dunlop Pneumatic Tyre v Selfridge & Co., plaintiffs sold certain goods to Dew & Co. and obtained an agreement from them not to sell the products below the list price, and if they sold the products to another trader, they would obtain from them a similar undertaking. Dew & Co. sold the purchased goods to Selfridge & Co., who agreed but later sold it for a price lesser than the list price. Dunlop sued Selfridge. It was held that privity of contract is applicable. Thus, Dunlop cannot sue Selfridge as the agreement was made between Selfridge and Dew & Co. 
Under English law, there is a difference between privity of contract and privity of consideration. Privity of contract means that an agreement cannot be enforced by a person who is not a party to contract even though made for his benefit. Privity of consideration means consideration must move from promisee only. If any other person furnishes it, the promisee becomes stranger to consideration. Privity of consideration is not applicable in India.

THIS ARTICLE DOES NOT INTEND TO HURT THE SENTIMENTS OF ANY INDIVIDUAL, COMMUNITY, SECT, OR RELIGION ETCETERA. THIS ARTICLE IS BASED PURELY ON THE AUTHOR'S 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.

Section Editor: Pushpit Singh | 03 Jun 2020 14:28pm IST


Tags : #consideration, privity of contract

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