Khwaja Muhammad Khan v. Husaini Begum

(1910) 37 Indian Appeals 152Privy Council1910Law of Contract I
privity-of-contractexceptionstrust-exceptionfamily-arrangement

Rule established

Where a contract, though made between other parties, creates a specific charge or trust in favour of a third party who is a natural object of the promisor's bounty, that third party may enforce the provision, an exception to the privity rule.

Facts

  • The defendant, as part of a family marriage arrangement, agreed to pay a specific maintenance allowance to his son's wife, charged against specific immovable property
  • The wife was not a party to this specific agreement between her father-in-law and her husband's family
  • She sought to enforce this maintenance provision when payment was not made
  • The defendant argued she could not sue, being a stranger to the contract

Issue

  1. Whether a person who is not a party to a contract can enforce a specific provision of that contract made expressly for their benefit, particularly where a specific charge on property secures this benefit.

Held

  • Where a contract creates a specific charge or trust in favour of a third party, and that third party is a natural object of the promisor's bounty (such as a family member the arrangement was specifically designed to benefit), the third party may enforce this specific provision
  • This constitutes a recognised exception to the general privity rule
  • The wife could enforce the maintenance charge despite not being a party to the underlying agreement

Ratio Decidendi

The privity rule admits an exception where a contract creates a specific trust or charge in favour of a third party who is a natural object of the promisor's bounty, permitting that third party to enforce the specific provision made for their benefit, even without being a party to the contract itself.

How to use it in an exam

  • Part A: Recognised exception to privity: trust/charge in favour of third party who is a natural object of bounty.
  • Part B: Pair with M.C. Chacko v State Bank of Travancore (1970) to show the general rule and this specific recognised exception operating together.
  • Key line: "The Privy Council recognised an exception to privity where a specific charge or trust benefits a third party who is a natural object of the promisor's bounty."

Source

Source: (1910) 37 IA 152

This is an educational summary, not the judgment itself. Cite the reported version in professional or academic work.

Cited in study notes

Law of Contract IDoctrine of Privity of ContractTrust and family arrangement exception to privity