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of <h1>Third parties can't sue on contracts without exceptions. Privity of contract key. Exceptions: trust, charge, family settlement.</h1> The judgment in this case reaffirmed the principle that a third party cannot sue to enforce a contract unless specific exceptions apply, such as trust ... - Issues Involved:1. Privity of Contract2. Applicability of the Principle in Tweddle v. Atkinson3. Agency and Trust Creation4. Specific Performance under the Specific Relief Act5. Exceptions to the General Rule of PrivityDetailed Analysis:1. Privity of Contract:The core issue is whether a contract between A and B to pay C, who is a creditor of A, entitles C to sue B. The judgment emphasizes that there was no privity of contract between the plaintiff and the 3rd defendant. The 3rd defendant's obligation was to the 1st defendant, and no direct obligation to the plaintiff was established.2. Applicability of the Principle in Tweddle v. Atkinson:The principle from Tweddle v. Atkinson (1861) 1 B. & Section 393: 121 E.R. 762 states that a stranger to the consideration cannot sustain an action on the promise made between two persons unless he has intervened in the agreement. The judgment reaffirms this principle, stating that a third party cannot sue on a contract to which they are not a party unless specific exceptions apply.3. Agency and Trust Creation:The judgment clarifies that the sale-deed did not create an express or implied trust. The 3rd defendant was not the plaintiff's agent, and no novation or obligation was undertaken by the 3rd defendant to the plaintiff. The law in England and similar views in India, such as in Raghunathachariar v. Sadagoppachariar (1911) 21 MLJ 983, support this position.4. Specific Performance under the Specific Relief Act:Section 23 of the Specific Relief Act allows specific performance where the contract benefits a third party in cases like marriage settlements or family compromises. However, the judgment notes that there is a divergence of opinion in Indian courts about how far a stranger to a consideration can enforce a contract. The judgment leans towards the view that a stranger to a contract cannot sue to enforce it without more.5. Exceptions to the General Rule of Privity:The judgment explores various exceptions to the general rule:- Trust Creation: If a trust is created in favor of the third party, they may enforce the contract.- Charge on Property: If a contract creates a charge on immovable property for the benefit of a third party, they may enforce it.- Family Settlements: In cases of family settlements or provisions for maintenance, third parties may enforce the contract.- Estoppel: If estoppel applies, the third party may enforce the contract.The judgment references several cases to support these exceptions, including Khwaja Muhammad Khan v. Husaini Begam, which distinguished the rule in Tweddle v. Atkinson based on the specific circumstances of the case, such as marriage contracts benefiting minors.Conclusion:The judgment concludes that a third party cannot sue to enforce a contract unless it falls within specific exceptions like trust creation, charge on property, or family settlements. The judgment reaffirms the principle in Tweddle v. Atkinson and aligns with the current of authority in Madras, emphasizing that the mere presence of all parties in court does not create a cause of action for the third party.
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