Doctrine of Privity of Contract — MCQs

All questions with answers and explanations

Read the full set here, or use the practice card above to test yourself one question at a time.

1. The doctrine of privity of contract means:

   • Only parties to a contract can sue or be sued on it (correct answer)
   • Anyone benefiting from a contract can enforce it
   • Contracts must be in writing to be valid
   • Consideration must be adequate

   Explanation. Privity of contract means only the actual parties to an agreement have standing to sue or be sued on it — a stranger generally cannot enforce it.

2. In Dunlop Pneumatic Tyre Co. v. Selfridge & Co., Dunlop could not sue Selfridge because:

   • Selfridge did not sell tyres below price
   • Dunlop was not a party to Selfridge's undertaking and gave no consideration for it (correct answer)
   • There was no written agreement
   • Selfridge was a minor

   Explanation. Only a party can sue on a contract, and no consideration moved from Dunlop to Selfridge. All the Lords relied on the lack of consideration, and Lord Haldane also relied on privity.

3. Which of these is NOT a recognised exception to privity of contract in India?

   • Trusts and beneficiaries
   • Family arrangements
   • Agency
   • Inadequate consideration (correct answer)

   Explanation. Inadequate consideration is unrelated to privity exceptions. The recognised exceptions include trusts/beneficiaries, family arrangements, agency, assignment, and acknowledgment/estoppel.

4. Chinnaya v. Ramayya established that in India:

   • Consideration can move from a third party (correct answer)
   • Privity of contract does not apply at all
   • Written contracts are compulsory
   • Minors can enter valid contracts

   Explanation. The case established that under Section 2(d)'s wording, consideration may be furnished by 'the promisee or any other person' — a genuine departure from English law on privity of consideration.

5. In Khwaja Muhammad Khan v. Husaini Begum, the Privy Council allowed the daughter-in-law to enforce the promise because:

   • She had signed the original agreement
   • It was made for her benefit under a family arrangement (correct answer)
   • She was the defendant's employee
   • The agreement involved a sale of goods

   Explanation. This is the recognised family-arrangement/beneficiary exception to privity — the agreement was made for her direct benefit within a family settlement.

6. Jamna Das v. Ram Autar Pande held that a mortgagee could not enforce a purchaser's promise because:

   • The promise was verbal
   • The mortgagee was never a party to the sale agreement (correct answer)
   • The mortgage had already expired
   • The purchaser was a minor

   Explanation. Strict privity of contract applied — the mortgagee was a stranger to the sale agreement between mortgagor and purchaser.

7. 'Privity of consideration' specifically asks whether:

   • A non-party can enforce a contract
   • Someone who gave no consideration can still enforce a promise (correct answer)
   • A contract needs to be registered
   • Damages can be claimed for breach

   Explanation. Privity of consideration is about whether a stranger to the consideration (not necessarily a stranger to the contract) can enforce a promise — Indian law says yes.

8. Under Section 2(d), consideration for a promise may be furnished by:

   • Only the promisor
   • Only the promisee
   • The promisee or any other person (correct answer)
   • Only a registered third party

   Explanation. Section 2(d)'s wording explicitly permits consideration to move from 'the promisee or any other person' — the basis for India's departure on privity of consideration.

9. In Tulk v. Moxhay, a buyer of land with notice of a restriction on its use was:

   • Free of the restriction as a stranger to the contract
   • Bound by the restriction (correct answer)
   • Liable only in damages
   • Entitled to cancel the sale

   Explanation. Tulk v. Moxhay is the exception where a restriction runs with the land and binds a later buyer who took with notice.

10. Under Section 147 of the Motor Vehicles Act, 1988, an injured third party can claim against the insurer because:

    • The third party is a party to the policy
    • The statute requires the policy to cover liability to third parties (correct answer)
    • The third party paid the premium
    • The insurer is the owner's agent

    Explanation. The statute makes third-party cover compulsory, so a stranger to the policy gets a direct claim.