Problem Based on Contract and Solution-7

Indian Contract Act, 1872

TANMOY MUKHERJEE INSTITUTE OF JURIDICAL SCIENCE

Dr. Tanmoy Mukherjee

Advocate

Problem Based on Contract and Solution-7

Tanmoy Mukherjee

Advocate

Question-

A, B and C are members of a family. There is a partition in the family. On partition of the property, A, B and C promises to pay the expenses for the marriage of an unmarried girl, M of the family. But afterwards they refuse to do the same. When M brought an action to enforce the agreement made between A, B and C, they gave the argument that since M is not a party to contract she cannot enforce the contract. Is the argument justified?

Fact-

A, B, C. (Family members), partition property and promise to pay marriage expenses of M, an unmarried girl of the family.

Later, they refuse.

Their defence- M is not a party to the contract. So C cannot enforce it.

Issue-

Is this argument valid?

Legal Principles-

Privity of contract-

-Only parties to a contract can sue or be sued on it.

-A stranger to a contract cannot enforce the contract.

However, there are exceptions-

Beneficiary under a family arrangement-

Indian Contract law recognizes certain non-party (third party) exceptions where a non-party can enforce a promise.

One well recognized exception is-

 Beneficiary in family settlement or partition arrangement.

When family members arrive at a settlement partition and conferred a benefit on a third person of the family (e.g. marriage expenses of a girl that person can enforce the agreement even if she was not a party to it).

Reference cases-

→Khinnalal v. Gorakdham (1911) -

A family settlement made for the benefit of a third party beneficiary, can be enforced by such beneficiary.

→Shiva Nath Prasad v. Shinghai Kesari (1967) -

A female member for whose marriage a provision is made in a family arrangement can sue to enforce it.

 

These cases clearly established that a person who is the beneficiary of a family arrangement has the right to enforce the promises despite the Privity Rule.

Application of the law to the given problem-

→The agreement between A, B and C is part of family partition.

→It confers a specific benefit on M (marriage expenses).

→M is the intended beneficiary.

→Therefore, even though M is not a party, she is still entitled to enforce the agreement because of the family arrangement exception.

Conclusion-

-The arguments of A, B and C is not justified.

-M, as the intended beneficiary of the partition arrangement, can enforce the contract and demand the payment of promised.