WHAT IS THE DOCTRINE OF PRIVITY OF CONTRACT? by Tanya Batra JOURNAL FOR LAW STUDENTS AND RESEARCHERS

A contract may be discharged either by the acts of the parties of the operation of law. Act of parties may take different forms like performance, agreement, breach, etc. While operation of law includes death, insolvency, etc.

However, the Contracts Act 1999 introduced a variety of allowances and exceptions for ius quaesitum tertio in English legislation. Other common-regulation international locations are also making reforms in this space, though the United States is exclusive in abandoning privity early within the mid-19th century. While selecting a substituted agent for the principal, the agent must exercise due care. Section 195 explains the nature of an agent’s duty in this regard. The agent exercises due care in selecting a substituted agent for his principal his responsibility is over.

• Thus, by agreement one party may relieve another party by giving up its right in full or by accepting less than the agreed consideration.
• The son was held liable on the grounds that it seemed highly inequitable to allow him from keeping the piece of wood to himself and yet deprive the plaintiff of her promised portion.
• Selfridge argued that Dunlop could not enforce the burden of a contract between Dunlop and Dew, which Selfridge had not agreed to.
• Thus, under insurance acts, a stranger to the contract may recover from the insurance company in case of third-party risks are recovered by the insurance policy.

Duties Of Agent Duty Not to Delegate His Duties – As a general rule, Agent can not delegate his obligations or in other words Agent can not make sub-agent for performing his duties on behalf of principal. This rule is contained in maxim “Delegations non potest delegree” i.e. Agent who has been delegated some authority cannot further delegate that authority to another person. Section 10 of the Indian Contract Act, 1872, describes lawful consideration as one of the essential ingredients to constitute a valid contract which means that an agreement without consideration is void. We find at the outset that bare words of promise have no standing/binding on either party.

Plaintiffs contended that the second telegram from defendants quoting lowest price was an offer and same had been accepted by plaintiffs and the contract was complete. It was held by Privy Council that exchange of above said telegrams had not resulted in Contract. The person who makes the proposal or offer is called the promisor or offeror and the person on whom the proposal is made is called the promisee or offeree. The Indian Contract Act was enacted in 1872 and came into force on 1st September 1872. The word ‘contract’ has been derived from the Latin word ‘contructus’ which means ‘to work on contract’. The law of contract is based on the principle of ‘pacta sunt servanda’ which means ‘agreements must be kept’.

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Nonetheless Bandita, without the permission of Chaaru, sells the land to Ajay for a total sum of rupees fifty lakh, paid in full and final settlement of the price. Chaaru challenges this transaction claiming the Bandita is a minor and hence the possession of the land shall not be given to Ajay. Thus Ajay is in a difficult situation and has no idea how to recover his money from Bandita. Rania applied for the post of Director in an organization.

In several situations, this can cause difficulties for electronic contracts. The emphasis is the bargaining power of the parties, for example when an individual accepts unfair terms of contracts to obtain goods or services or means of subsistence. Nevertheless, in cases where the parties are in equal or almost equal bargaining positions, the courts should not interfere.

The person on whom the proposal is prepared is the promisee/offeree. Where the excess of the agent’s authority is not separable from the transaction, the principal is not liable for the transaction. – The agent has a duty to pay to his principal all sums received on principal’s account. But he has also a right to retain, out of any sums received on account of the principal, all moneys due to himself in respect of advance made on expenses properly incurred by him in conducting such business, and also such remuneration as may be payable to him for acting as agent. So Agent when having expressed or implied authority, can name a person to act on behalf of principal, in his place such agent will be substituted agent and not sub-agent.

Although the Act does not specify that the agent can ask the principal to render accounts but if the accounts are kept by the principal and the commission due to the agent can’t be determined without them, he may ask the principal to render accounts. Section 119 of Act then says that a sub-agent is a person employed by and acting under the control of, the original agent in business of agency. – A principal cannot ratify only those parts of the transaction which are favourable to him, and disown others. If he makes ratification, it is deemed to be ratification of the whole act. It was observed by Baron Park in Hawantazen v. Bourne, 7 M.

Electronic trading, however, poses some new and interesting technological and legal problems because of the way it differs from conventional trade. It means that a stranger to consideration cannot sue or be sued even if the contract was intended to benefit him. We Encountered this principle when considering the rule that ‘consideration must move from the promisee’ It was so held in Scruttons Ltd v. An English legislation from 1677, the “Statute of Frauds,” supplies the idea for present written contract necessities. The aim of written contract guidelines stays the same as ever-to avoid fraud by requiring written proof of the underlying agreement. This authorized objective is smart as a sensible objective as properly, since disputes over high-staked verbal agreements typically would lack an goal record of the contractual terms.

Exceptions to the Doctrine of Privity of contract

The reason why the law enforces only those promises which are made for consideration is that gratuitous or voluntary promises are often made rashly and without due deliberations. The doctrine of Privity of Consideration states that the consideration should only circulate from the promisee and the stranger to the contract, despite the fact that a beneficiary can put into effect the terms of the agreement. This precept of the doctrine of Privity of Consideration is not applicable in India. As according to the Indian Contract Act, 1872, the consideration may also circulate from the promisee, or some different person, if the promisor has no objection, from any other person. Under the English Law a “stranger to consideration” cannot sue the promisor. But in India, the Law is opposite and here even a “stranger to the consideration” can sue on a contract, provided of course that he became a party to the agreement.

Hence, it is one of the most significant acts in India. It suggests that if any breach of contract due to any party occurs, the abused party can approach the court and have it legally enforced. Alternatively, the court orders the party who breached the contract to correct it or recompense the abused party in the form of reimbursements. the expression privity of contract means A contract is a legal enforcement between two parties, companies, or businesses that bonds them in an agreement protected by law. The contract among the parties can be created verbally, in writing, or by conduct. When the offer is accepted by both the involved parties/companies/businesses, it is called an agreement.

An offer to one of several joint promisees has the same legal consequences as an offer to all of them.” Illustration – A agrees to pay B 1,000 rupees if B will marry A’s daughter, C. In such contracts, one party agrees to do or not to do something for the other. When the performance of the contract is not dependent on the happening of some future uncertain event, collateral to the contract it is an absolute contract and not a contingent contract. According to Sir W. Anson “It is a promise to give money or money worth upon the determination or ascertainment of an uncertain event.”

In every contract of guarantee there are three parties, the creditor, the principal debtor and the surety. There are three contracts in a contract of guarantee. Firstly, the principal debtor himself makes a promise in favour of the creditor to perform a promise, etc.

Role Of Consideration In Privity Of Contract:

The object underlying the inclusion of non-judicial members appears to be to impart a balance to the functioning of the District Forum by ensuring that the members are able to understand the economic and social impact of the matters. Further inclusion of one female members ensures that the matters are viewed from a woman’s angle also. District Forum and State Commission are formed by States with the permission of the Central Government while the National Commis­sion is formed by the Central Government. These forums have not taken away the jurisdiction of the civil courts but have provided an alternative remedy. Every notice of a meeting of the Central Council shall specify the place and the day and hour of the meeting and shall contain statement of business to be transacted thereat.

The communication of revocation is complete against the person to whom it is made when it comes to his knowledge. Where the consideration or object is forbidden by law – A contract which is expressly forbidden and made criminal by statute can give no cause of action to a party who seeks to enforce it. Marriage Settlement of Minor – In case of provisions of marriage settlement of minors, the minor is entitled to sue to enforce his claim.

He is also bound by the acts done in emergency and even on grounds of estoppels. Hence there is an exception that when the principal may not be bound for the acts done by an agent without any authority. If principal here ratifies i.e., gives approval that the act was done without his authority but on his behalf the principal would be bound in respect of such act.

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So in view of provisions of Section 128 of the Act the liability of surety is joint and several with the principal debtor, if principal debtor makes a default in discharging his liability, creditor can enforce it from surety or both. Creditor can sue surety alone without even exhausting his right to sue principal debtor, unless, however contrary is agreed upon under the contract. In Chand Rani v. Kamal Rani AIR 1993 SC 1742 Supreme Court observed “In case of sale of immovable property there is no presumption as to time being the essence of the contract”. Whether time is essence of contract or not depends upon intention of parties and nature of transaction.

The Privy Council held that the undertaking to pay back the mortgagee was given by the defendant to his vendor. The mortgagee has no right to avail himself of that which he was not a party. The purchaser entered into no contract with him, and the purchaser is not personally bound to pay B his mortgage debt. This line of thinking has been followed in various cases. The authority for the application of the rule in India is the decision of the Privy Council in Jamna Das v. Ram Avtar.

The Commission held it as deficiency in service – Poonam Verma v. Ashwin Patel II CPJ 1 SC. When a service is found deficient by a consumer, he can make a complaint under the Act. Thus the prime requirement is that the matter must fall within the definition of service, and it must entail a deficiency as per the norms given by the Act.

The Consumer Protection Act, 1986 was enacted to provide a sim­pler and quicker access to redressal of consumer grievances. The Act for the first time introduced the concept of ‘consumer’ and conferred express additional rights on him. It is interesting to note that the Act doesn’t seek to protect every consumer within the literal meaning of the term. The protection is meant for the person who fits in the definition of ‘consumer’ given by the Act. In the case of Jamna Das v. Ram Avatar ILR 38 All 209, A mortgaged property to Jamna Das, A also sold the same property to Ram Avatar with the condition that Ram Avatar would pay the mortgage money.