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CMA Foundation · Fundamentals of Business Laws and Business Communication · Void and Voidable Agreements, No Consideration No Contract

Anil promises in writing to pay Rs. 1,00,000 to Bhavna, with the money to be used for her sister Chitra's education. Chitra is not a party and Bhavna provided consideration. Chitra sues Anil for the amount. Which is the correct general position?

Chitra cannot sue because she is a stranger to the contract, though she benefits from it. Only Bhavna, the party who gave consideration, can enforce Anil's promise. The contract itself is valid, so it is not void.

  1. AChitra can sue because the money is meant for her benefit
  2. BChitra cannot sue as she is a stranger to the contract, although Bhavna can enforce itCorrect
  3. CNeither Bhavna nor Chitra can sue as the contract is void
  4. DChitra can sue only if Anil consents after the promise

Explanation

Privity requires that only parties may sue. Bhavna, as promisee who gave consideration, may enforce the promise, but Chitra as a stranger cannot, even though she is the beneficiary. The contract is valid, so it is not void.

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