| Basis | Stranger to Contract (Privity of Contract) | Stranger to Consideration (Privity of Consideration) |
|---|---|---|
| Meaning | A person who is not a party to the contract. | A person who has not provided consideration for the promise. |
| Main question | “Can a third party enforce the contract?” | “Must consideration move only from the promisee, or can it move from someone else?” |
| General rule | Cannot sue on the contract because there is no privity (subject to exceptions). | In India, it is not a bar if the promisee did not give consideration, because it may move from another person. |
| Indian statutory basis | Not expressly stated, but implied through the ICA scheme (e.g., Sections 2(h), 10, 37, 73). | Section 2(d), ICA: consideration may move from the promisee or any other person. |
| Position in English law (traditional) | Strict: only parties can sue (classic rule). | Traditionally stricter: consideration generally must move from promisee. |
| Position in Indian law | Generally follows privity of contract, with recognized exceptions (trust, family settlement, charge, agency, assignment, etc.). | Rejects strict privity of consideration (allows third-party consideration). |
| Leading case | Dunlop Pneumatic Tyre Co. v. Selfridge (1915) — stranger to contract cannot sue. | Chinnaya v. Ramayya (1882) — consideration may move from a third party, promise still enforceable. |
| Practical example | A and B contract that B will pay ₹10,000 to C. C cannot sue B unless an exception applies. | A gives property to B; B promises to pay annuity to C. Even though C gave no consideration, C can enforce (India). |
| Exam “one-liner” | Stranger to contract = no right to sue (unless exception). | Stranger to consideration = not a problem in India due to Section 2(d). |
Privity of Contract vs Privity of Consideration
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Updated on 21 January 2026
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