PRINCIPLE: A contract cannot be enforced by or against a person who is not a party to it. However, where some benefit is conferred on third party by the contract itself, there third party can be allowed to enforce that contract to get such benefit. FACTS: Dinesh is liable to pay Rs. 50,000 to Suresh. In order to discharge this liability Dinesh enters into a contract with Ramesh by which Dinesh sells his car to Ramesh for Rs. 1 lac. Ramesh takes the delivery of the car and promises/assures to pay its price at the earliest. Dinesh separately informs Suresh about this contract for his satisfaction. Ramesh fails to pay the car’s price. Suresh wants to join Dinesh in filing suit against Ramesh for the recovery of price of the car. Whether Suresh is entitled to do so? (Answer the question after reading the following paragraph.)

This question consists of legal propositions/principles (hereinafter referred to as ‘principle’) and facts. These principles have to be applied to the given facts to arrive at the most reasonable conclusion. Such principles may or may not be true in the real sense, yet you have to conclusively assume them to be true for the purposes of this section. In other words, in answering the following questions, you must not rely on any principles except the principles that are given herein below for every question. Further you must not assume any facts other than those stated in the question. The objective of this section is to test your interest towards study of law, research aptitude and problem solving ability even if the “most reasonable conclusion” arrived at may be unacceptable for any other reason. It is not the objective of this section to test your knowledge of law.

Option A: Suresh is entitled to do so because the contract was made for his benefit.

Option B: Suresh is entitled to do so because Dinesh is liable to him and discharge of this liability depends upon the payment of the price of the car by Ramesh.

Option C: Suresh is not entitled to do so because liability of Dinesh does not depend upon any assurance of Ramesh.

Option D: Suresh is not entitled to do so because he is not a party to the contract between Dinesh and Ramesh.

Correct Answer

Option: b

Explanation

The Indian Contract Act, 1872, allows the ‘Consideration‘ for an agreement to proceed from a third-party.

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