Privity of Contract

India– The general rule of law is that only one or the other party to the contract can approach the court for its enforcement, not a stranger. But there are exceptions engrafted to this rule and one of them firmly recognised is that if the contract has the effect of creating a trust in favour of a third person such person may sue to have the obligation arising for his benefit fulfilled. The basis of that rule is that though he is not a party to the contract his rights are equitable and not contractual.
Please see the following judgments on this topic: M.C. Chacko v. State Bank of Travancore (Supreme Court of India, 1969); Madhav Trading Co. v UOI (Delhi High Court, 1978)

Author: Vikrant Narayan Vasudeva
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