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

Section 2(d) of the Indian Contract Act, 1872 defines consideration as something done or promised 'at the desire of the promisor' by the promisee 'or any other person'. What does this wording mean for the relationship between privity and consideration in India?

Consideration may be given by the promisee or any other person, so it need not move from the promisee alone. But privity still applies, so only a party to the contract can sue to enforce it. A stranger to the contract cannot do so.

  1. AConsideration may move from a third person, but the person who sues must still be a party to the contractCorrect
  2. BConsideration must always move from the promisee personally and from nobody else
  3. CA stranger to the contract can sue if he has furnished the consideration
  4. DConsideration is not required if the promisor and promisee are related

Explanation

Section 2(d) allows the promisee or any other person to provide consideration, so the Indian rule is wider than the English one. However, the right to enforce still belongs only to a party to the contract. Option 'must move from promisee only' is the English rule and is wrong here.

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