State with reasons whether the following statement is correct or incor...
Statement: A stranger to the contract can enforce the contract.
Response:
Introduction:
In contract law, a contract is a legally binding agreement between two or more parties. It sets out the rights and obligations of the parties involved. Generally, only the parties to a contract have the ability to enforce it. However, there are certain exceptions to this rule.
Explanation:
1. Privity of Contract:
The concept of privity of contract states that only the parties who have entered into a contract can enforce it. This means that a third party, who is not a party to the contract, cannot enforce it. This principle is based on the idea that only the parties who have given their consent and have agreed to the terms of the contract should have the right to enforce it.
2. Exceptions to Privity:
Although the general rule is that a stranger to the contract cannot enforce it, there are certain exceptions to this rule. These exceptions have been recognized by courts to ensure fairness and justice in certain situations. Some of the common exceptions include:
- Assignment of rights: If one of the parties to a contract assigns their rights under the contract to a third party, that third party may be able to enforce the contract. This means that the third party steps into the shoes of the original party and can enforce the rights and benefits under the contract.
- Agency: If a person acts as an agent on behalf of one of the parties to a contract, they may be able to enforce the contract. This is because the agent is acting on behalf of the party and has the authority to enforce the contract.
- Beneficiary of a contract: In some cases, a contract may be made for the benefit of a third party. If the contract clearly states that the third party is intended to benefit from the contract, they may be able to enforce it. This is often seen in contracts such as insurance policies or trust agreements.
Conclusion:
In conclusion, the general rule is that a stranger to the contract cannot enforce it. However, there are certain exceptions to this rule, such as assignment of rights, agency, and being a beneficiary of a contract. These exceptions allow for fairness and flexibility in contract enforcement, ensuring that the intentions of the parties are upheld.
State with reasons whether the following statement is correct or incor...
As per Indian contract act, Doctrine of privity of contract, a contract can be enforced only by the parties of contract.
A stranger to contract can't sue or be sued because he has no interest in the contract.
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.