Friday, May 31, 2024





Differentiate between Privity of Contract and Privity of Consideration.

BasisPrivity of Contract Privity of Consideration
MeaningThe “doctrine of Privity of a contract” is a common law principle that implies that only parties to a contract are allowed to sue each other to enforce their rights and liabilities and no stranger is allowed to confer obligations upon any person who is not a party to contract.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 a “stranger to consideration” and, therefore, cannot enforce the promise. This is known as the doctrine of ‘Privity of Consideration.
ScopeThe privity of contract applies both in English law and Indian law.The Privity of Consideration only applies in English law and not in Indian law.
ExceptionsThe Privity of Contract has certain exceptions such as agency, Estoppel, Covenant attached to land, Trust, Family Settlement, and Assignment.As the Privity of Consideration does not apply in India, there are no exceptions to it.
ProvisionThere is no Express provision under the Indian Contract Act that provides for the doctrine of Privity to Contract.Section 2(d) of the Indian Contract Act states that the consideration may move from the promisee or any other person on the desire of the promisor. This impliedly means that the doctrine of Privity of consideration does not apply in India and consideration may move from a third party also.

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