The leading case is:
DUNLOP PNEUMATIC TYRE Co. V. SELFRIDGE & Co.(1915)
A sold a large quantity of tyres to B at a certain price on entering into a covenant not to sell the tyres below the price mentioned in price list supplied by A. B sold the tyres to C a retail dealer under a contract stipulating the same covenant as between A and B. C sold the tyres at less than the list price. A sued C for breach of contract. It was held that A could not sue C as A was not a party to contract between B and C.
A stranger to a contract cannot sue expect in the following cases:
1. Trust:
In the case of trust, the beneficiary may enforce the contract even though he is stranger to contract creating the trust.
2. Where provision is made in a marriage settlement:
Where an agreement is made in a connection with marriage and a provision is made for the benefit of a person he may take advantage of that agreement although he is not party to it.
3. Where provision is made in a partition or family settlement:
Such members though not parties to the agreement can sue on the footing of the arrangements.
4. Where a charge is created in favour of a stranger on specific immovable property:
A stranger to a contract can sue for the money made payable to him by it where the money is charged on immovable properties.
5. Where the promisor has by his conduct privity of contract with the stranger:
Thus, if A admits to C for the money, that he had received money from B for payment to c, he constitute himself as the agent of C, who can successfully recover the amount from A.
6. Where it is conductive to justice.
7. Contract entered into by an agent can be enforced by the principal.
8. Covenants Running with the land:
At the time of transfer of immovable property, a notice that the owner of the land is bound due to certain obligations created by a agreement relating to land, the new purchaser will be bound by them though he was not a party to the original covenant. [Tulk vs. Moxhay(1919)]