While discussing second rule regarding consideration above, we have seen that consideration may be given by the promisee or by a third party. When consideration is given by a third party then the promisee is called stranger to consideration. Under Indian Law, a stranger to consideration can file a suit to enforce the promise as you might have noticed in the case of Chinayya v. Ramayya discussed above.
Stranger to contract :
If a person is not a party to a contract, he is called a stranger to contract. This is a cardinal principle of law that only a party to a contract can sue. If a person is not a party to a contract, he cannot sue even if the contract is for his benefit. To create legal relationship, privity of contract (contractual relationship) is necessary. A contract cannot confer any right nor impose any liability upon a person who is not a party to it. For example, A agrees with B to give Rs. 500 to C. C cannot file a suit against A to recover Rs. 500 as there is no contract between A and C (Contract is between A and B) and C is a stranger to the contract.
Thus difference between a stranger to consideration and a stranger to contract is that a stranger to consideration is a party to the contract but consideration is given by a third person. Whereas a stranger to contract is not at all a party to the contract, the contract is between other parties.