Page 47 - DCOM103_COMMERCIAL_LAW

Commercial Law

Notes
Example: (a) A agrees to transfer certain properties to be held by T in trust for the benefi t
of B. B can enforce the agreement (i.e., the trust) even though he is not a party to the agreement
[M. K. Rapai v. John, AIR (1965) Ker. 203].
(b) A husband who was separated from his wife executed a separation deed by which he promised
to pay to the trustees all expenses for the maintenance of his wife. Held, the agreement created a
trust in favour of the wife and could be enforced [Gandy v. Gandy (1884) 30 Ch. D. 57].
(c) A had a son SA and B had a daughter DB. A agreed with B that in consideration of the
marriage of DB with SA, he (A) would pay to DB, his daughter-in-law, an allowance of ` 500 a
month in perpetuity. He created a charge on certain properties for the payment and conferred
power on DB to enforce it. Held, DB, although no party to the agreement, was clearly entitled to
receiver the arrears of the allowance [Khwaja Mohd. Khan v. Hussani Begum, (1910) 32 All. 410].
(2) Marriage settlement, Partition or other family arrangements. When an arrangement is made
in connection with marriage, partition or other family arrangements and a provision is made for

the benefit of a person, he may sue although he is not a party to the agreement.

Example: (a) Two brothers, on a partition of joint properties, agreed to invest in equal
shares a certain sum of money for the maintenance of their mother. Held, she was entitled to
require her sons to make the investment [Shuppu Ammal v. Subramaniyam, (1910) 33 Mad. 2].
(b) J’s wife deserted him because of his ill treatment. J entered into an agreement with his father-
in-law to treat her properly or else pay her monthly maintenance. Subsequently she was again
ill-treated and also driven out. Held, she was entitled to enforce the promise made by J to her
father [Daropti v. Jaspat Rai, (1905) PR 17].

(c) A mother agreed to pay to her younger son in the event of the failure by the elder son to
pay to the younger son the amount which fell short of the younger son’s share in the assets left
by their father. The agreement was made to purchase peace for the family. Held, it was a valid
family arrangement creating liability of mother [Commissioner of Wealth Tax v. Vijayaba, AIR (1979)
S.C. 982].

(3) Acknowledgement or estoppel. Where the promisor by his conduct, acknowledges or otherwise
constitutes himself as an agent of a third party, a binding obligation is thereby incurred by him
towards the third party.

Example: A receives some money from T to be paid over to P. A admits of this receipt to
P. P can recover the amount from A who shall be regarded as the agent of P.

(4) Assignment of a contract. The assignee of rights and benefits under a contract not involving
personal skill can enforce the contract subject to the equities between the original parties [Krishan
Lal Sadhu v. Promila Bala, AIR (1928) Cal. 518]. Thus the holder in due course of a negotiable
instrument can realise the amount on it even though there is no contract between him and the
person liable to pay.
(5) Contracts entered into through an agent. The principal can enforce the contracts entered into
by his agent provided the agent acts within the scope of his authority and in the name of the
principal.
(6) Covenants running with the land. In cases of transfer of immovable property, the purchaser of
land with notice that the owner of the land is bound by certain conditions or covenants created by
an agreement affecting the land shall be bound by them although he was not party to the original
agreement which contained the conditions or covenants [Tulk v. Moxhay (1919) 88 LJ KB 861].

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