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Meaning of privity of contract

The doctrine of privity of a contract means that a contract is a private relationship between the parties to the agreement and no other person can acquire the rights or liabilities under it. A contract is an agreement between two or more parties that creates an obligation to do or not to do something. A contract cannot confer rights or impose obligation on any person except the parties to it. Hence, only party to a contract can sue or be sued for the enforcement of the contractual obligations and a person who is not a party to a contract cannot sue or be sued. This establishes the rule “Stranger to a contract cannot sue”.
A stranger to a contract means the person who is not a party to the contract. The stranger to a contract is known as a third party. A stranger to a contract cannot sue except in few cases.
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Stranger to a consideration

If a consideration moves from promisee or any other person on his behalf it will be a valid consideration (Ref.: Chinnaya vs. Ramayya). The person who does not provide consideration, even though he may or may not be a party to contract, such person is known as stranger to consideration and gets right to sue with respect to his rights arising from the contract. Hence a stranger to a consideration can sue but a stranger to a contract cannot sue.


Note: Under English Law stranger to consideration cannot sue.

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