The general rule is that third parties cannot sue for the execution of promises made by the parties to a contract. Hence, if a contract between ‘D’ and ‘F’ requires ‘F’ to benefit ‘A’ the rule of Privity prevents ‘A’ from suing ‘F’. However, ‘F’ may be sued by ‘D’ if he commits breach of contract and the court may award damages to ‘D’ or grant a decree of specific performance under which ‘F’ must perform the contract for the benefit of ‘A’. Where ‘D’ and ‘A’ are in fact are both parties to the contract with ‘F’, then ‘A’ still cannot sue ‘D’ unless he has provided some consideration. It is not enough to be merely a party to the contract. The situation is different where ‘D’, ‘F’ and ‘A’ are parties to a Deed. ‘A’ can then sue ‘F’ for damages if he fails to perform the promises in the Deed since Deeds do not require consideration. In certain cases, a person is also allowed to sue upon a contract to which he is not a party. This is an exception to the rule of Privity. The provisions of Contracts (Rights of Third Parties) Act, 1999 lays down exception to the law of Privity. A third party has a right to enforce a term of a contract where the contract contains an express term stating the right and where a term of the contract purports to confer a benefit on such third party.
