Under the English Law, consideration must move from the promisee and not from a third party, otherwise it is not valid.
The promisee cannot sue, if it moved from a person other than himself. It means, a stranger to consideration in a contract cannot sue on the contract.
ADVERTISEMENTS:
But under the Indian Law consideration may move from the promisee or any other person, this means, a person can sue on a contract even if the consideration for the promise is moved from a third party. In other words, a stranger to consideration, in a contract, has the right to sue.
A stranger to consideration is different from a stranger to contract. A stranger to consideration under the English Law cannot sue on a contract. But under the Indian Law, he can do so, if he is a party to contract. [Chinnaya vs. Ramayya (1881), 4 Mad. 137]
Image Source: pageacademy.com
It is the general rule of the law that a person who is not a party to a contract, cannot sue upon it even though the contract is for his benefit.
This means, a stranger to a contract cannot sue. In this regard both Indian and English Law are the same, i.e., under both, a stranger to a contract cannot sue as the legal effect of a contract is confined to the contracting parties only.
Exceptions to the rule:
A stranger to a contract cannot sue. Under the Indian Law, there are following exceptions to this rule:-
ADVERTISEMENTS:
(i) When a trust is created a beneficiary can sue, though he is not a party to the agreement.
(ii) Where a provision is made in marriage settlement, e.g., marriages of minors by their parents.
(iii) Where a provision is made in a partition of family arrangement for maintenance and marriage expenses of female members.
ADVERTISEMENTS:
(iv) Where a charge in favour of a person is created on a specific immovable property. Such a charge is enforceable on the instance of the person, in whose favour it has been created.
(v) When the defendant constitutes himself as the agent of the third party.