Q.A and B enter into a contract under which A agrees to pay ₹50,000 directly to C, a close friend of B, in consideration of B transferring his shop to A. A later refuses to pay C. Can C sue A for the ₹50,000? Discuss with reference to the doctrine of privity of contract.

This tests the doctrine of privity of contract, which is a step further than the 'stranger to consideration' rule.

Step 1 — Note the distinction from 'consideration from a stranger.' Indian law does allow CONSIDERATION to move from a person other than the promisee (a 'stranger to the consideration'). That is not the issue here — B himself supplied the consideration (transferring the shop). The issue is whether C, a person who is not a PARTY to the contract at all, can sue on it merely because a benefit was meant for him.

Step 2 — Apply the doctrine of privity of contract. As a general rule, a person who is not a party to a contract cannot sue upon it, even where the contract was made expressly for that person's benefit. On the bare facts given, C is a stranger to the A-B contract, so C cannot maintain a direct action against A. …