This "consideration" rule is related to the doctrine of privity and is regarded as a possible explanation for the doctrine.
Strict adherence to the privity doctrine can prove artificial and contrary to the parties' intention, and can lead to injustice and inconvenience. There are, however, circumstances in which the doctrine does not apply, either because of supervening principles of common law or because of specific statutory provisions which allow a third party to enforce a right conferred on him by the contracting parties. These are as follows;.
(i). Covenants concerning land.
Covenants in a lease can benefit third parties who later acquire an interest in the property. Hence a person may be able to enforce a covenant affecting land made by his predecessor in title even though he was not a party to the covenant, and a covenant may be enforced against someone acquiring land with notice that it is burdened with a covenant.
(ii) Trusts.
A trust is an equitable obligation to hold property on behalf of a beneficiary. A chose in action may be the subject matter of a trust. For example, if A makes a promise to B to pay a sum of money to C, a trust of that promise can be construed as created by B in equity in favour of C. In such case, B would be the trustee while C would be the beneficiary under the trust.
If this agreement is construed by the court as a properly constituted trust, C can, in his capacity as beneficiary, sue A to enforce the promise. Though C is not a party to the promise made by A to B, C could nonetheless enforce the promise in equity. .
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However, the use of this trust device to circumvent the doctrine of privity has its restrictions. A promisee (ie B in the example quoted above) is not a trustee for a third party unless he manifests an intention to create a trust. Where the word "trust" or "trustee" is not used, there may be difficulties in determining whether or not there is the requisite intention to create a trust.
