CHINNAYA v.

RAMMAYA
CASE DETAILS

• Court: Madras High Court

• F u l l C a s e N a m e : C h i n n a y a V. R a m m a y a ( 1 8 8 2 )
• Date Decided: 21st October 1987
• Citations: ILR (1876-82) 4 Mad 137
• Judges: Innes J, Kindersley J
• A p p e l l a n t :   Ve n k a t a C h i n n a y a
• R e s p o n d e n t :   Ve n k a t a R a m a y y a G a r u
FACTS
◦ A, an old lady, granted / gifted an estate to her daughter the
defendant, with the direction / condition that the daughter should
pay an annuity ( annual payment ) of Rs 653 to A’s brother, the
plaintiff.
◦ On the same day the defendant, daughter (promisor) , made a
promise vis a vis an agreement with her uncle that she would pay
the annuity as directed by her mother, the old lady.
◦ Later the defendant refused to pay on the ground that her uncle
(promisee, plaintiff) has not given any consideration. She contended
that her uncle was stranger to this consideration and hence he
cannot claim the money as a matter of right
 ISSUE:

Whether the plaintiff can bring an action against the

defendant for the amount promised in a contract
where the consideration for such promise has been
furnished by the mother of the defendant (plaintiff’s
sister)?
ARGUMENTS

◦ Plaintiff’s ◦ Defendant’s
The consideration for the
defendant’s mother to The plaintiff had not
gift the property to the furnished any
defendant was consideration under the
defendant’s promise to contract. Hence, she is
pay an annuity to the not entitled to sue the
plaintiff. Hence, the defendant for the
plaintiff is entitled to sue recovery of the amount
the defendant to recover promised to her.
the same.
CONISDERATION
As per section 2(d) of the Indian Contract Act (1872), “When, at the
desire of the promisor, the promisee or any other person has done or
abstained from doing or does or abstains from doing, or promises to
do or abstain from doing, something, such act or abstinence or
promise is called a consideration for the promise.
LEGAL RULES REGARDING CONIDERATION

Must be of some
Move at the desire Need not be value in the eyes
of the promiser adequate of law
1 3 5

2 4 6

May move from Must be real and It may be past

the promisee or not illusory present future
any other person

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What is past consideration?
Consideration from the past which was not provided to
induce a promise is “past consideration” and usually
does not create an enforceable contract. Where the
promisor had received the consideration before the
date of the promise, the consideration is past
consideration or executed consideration. 

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DIFFRENCE BETWEEN ENGLISH LAW AND INDIAN LAW

◦ Past consideration in ◦ Past consideration in

Indian law English law
◦ In India, past consideration is ◦ The English law does not recognize
a good consideration. It is a past consideration. In English,
sufficient to support a promise. Law consideration may be present
or future but not past. Past
Section 2(d) of the Contract
consideration is no consideration at
Act clearly lays down that all in English Law. Hence an
consideration may be past, agreement based on past
present or future. Hence an consideration is void.
agreement based on past Consideration may be executory
consideration is perfectly valid but it must not be passed .
in India.
◦ Roscarla Thomas case
◦  Sindha v. Abraham

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SECTION 25
Agreement without consideration, void, unless it is in writing
and registered or is a promise to compensate for something
done or is a promise to pay a debt barred by limitation law.—
An agreement made without consideration is void, unless
— —An agreement made without consideration is void,
unless—"

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EXECPTION

💑
SECTION 25(1) SECTION 25(2) SECTION 25(3)
It is expressed in writing It is a promise, made in writing
and registered under the  It is a promise to and signed by the person to be
law for the time being in compensate, wholly or charged therewith, or by his agent
force for the registration in part, a person who generally or specially authorized
of 1[documents], and is has already voluntarily in that behalf, to pay wholly or in
made on account of done something for the part a debt of which the creditor
natural love and affection promisor, or something might have enforced payment but
for the law for the limitation of
between parties standing which the promisor
suits. In any of these cases, such
in a near relation to each was legally an agreement is a contract. 
other; or unless compellable to do; or
unless.
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PRIVITY OF CONTRACT
The doctrine of privity of contract states that only the
parties to the contract can enforce the contract or take
action against it. A person who is not a party to the
contract but perceives some benefits from the
contracts is not entitled to take any enforcement
action.
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“ “The doctrine of privity means that a contract cannot,
as a general rule confer rights or impose obligations
arising under it on any person other than the parties
to it.”

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EXEPTIONS TO DOCTRINE OF PRIVITY OF CONTRACT

◦ AGENT ◦ TRUST ◦ COLLATERAL

◦ If a person enters into a contract ◦ If a contract is made CONTRACT
through an agent, where the between the trustee of a
agent acts within the scope of his trust and another party, In case of a contract is
authority and in the name of the then the beneficiary of the accompanied by a collateral
person (principal). trust can sue by enforcing contract, then the party to
his right under the trust, the collateral contract can
even if he is a stranger to enforce the contract. For
the contract. example, when a party ‘A’
purchases goods from ‘B’,
there is a contract between
A and the manufacturer of
that good.

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JUDGEMENT
The madras high court held that in this agreement between the defendant and plaintiff the

consideration has been furnished on behalf of the plaintiff (sister) by her own sister

(respondents’ mother). Although the plaintiff was stranger to the consideration but since he

was a party to the contract, he could enforce the promise to the promisor, since under law,

consideration may be given by the promise or anyone on her behalf – vide section 2(D) of

indian contract act,1872.

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Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd

◦ dunlop was a tire manufacturer who agreed with their dealer to not sell the tires below a

recommended retail price (RRP). As part of the agreement, Dunlop also required their dealers to gain

the same agreement with their retailers, who in this instance was Selfridge. The agreement held that if

tires were sold below the RRP, they would be required to pay £5 per tire in damages to Dunlop. This

was agreed between the dealer and Selfridges, which effectively made Dunlop a third-party to that

agreement. Sometime after this, Selfridge sold the tires below the agreed price and Dunlop sued for

damages and an injunction to prevent them from continuing this activity. At the initial trial, the

decision was given to Dunlop. This was appealed by Selfridge and the decision was reversed. Dunlop

appealed.

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Issue
Selfridge argued that Dunlop could not enforce the contract as Dunlop was
not part of the agreement between the dealer and Selfridges. On this basis,
the question for the court was whether Dunlop had the right to access
damages without a contractual relationship.

Decision/Outcome
The court held in a unanimous decision that Dunlop could not claim for
damages in the circumstances. The court found that firstly, only a party to a
contract can claim upon it. Secondly, Dunlop had not given any
consideration to Selfridge and therefore there could be no binding contract
between the parties. Lastly, Dunlop was not listed as an agent within the
contract and could therefore not be included as a valid third-party who had
rights to claim on the contract.

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CONCLUSION
In indian law, consideration may be given by the promise or any other
person. In india, there is a possibility that consideration for the
promise may move not from the promise but a third person, who is
not a party to the contract, different from the english law in which the
consideration must move from only the promise

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BIBLIOGRAPHY
• The Indian Contract Act, 1872 by Fredrick
Dinshaw Mulla
• Contract and Specific Relief by Avatar Singh
• Indiankanoon.org
• Legalbites.in
• GH Treitel, The Law of Contract
• https://indiankanoon.org/doc/171398/
• https://legaldictionary.net/consideration/

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