1954 Present : Rose, C.J., and Gratiaen, J.

G. P. KODIKARA, Appellant, and S. A. FERNANDO, Respondent

S. C. 431-D. C. Negombo, 15,730 L

Contract-Stipulation in favour of third party-Validity thereof-Roman-Dutch Law.

Under Roman-Dutch law a stranger to a contract is entitled to claim the benefit of a stipulation made in his favour. This rule is subject only to the qualification that until the benefit stipulated for has been accepted by him he can be deprived of it by agreement between the contracting parties without reference to him.

APPEAL from a judgment of the District Court, Negombo.

H. W. Jayewardene, with D. R. P. Goonetilleke, for the plaintiff appellant.

M. I. M. Haniffa, with M. H. M. Naina Marikar, for the defendant respondent.

Cur. adv. vult.

May 20, 1954. GRATIAEN, J.-

This action relates to a property which Lucia Fernando had donated to her grandson Joseph Fernando on 11th August 1945 subject to (1) a, life-interest in herself and (2) a condition that the donee, " his heirs, executors, administrators and assigns " would sell the property to the plaintiff " or his heirs " for a consideration of Rs. 350 " at any time that he demands within a period of five years from the date hereof" (P2). Joseph Fernando accepted the gift and the condition attaching to it.

By a conveyance P3 dated 27th September 1945 Lucia and Joseph Fernando purported to sell the property to the defendant (who is Lucia's son) "to have and to hold the same absolutely and for ever". There can be no doubt that P3 operated effectively to transfer Lucia's life-interest as well as the right, title and interest which had previously passed to Joseph under P2. The question is whether or not the conveyance was subject to the original condition attaching to the grant in favour of Joseph and his " assigns ".

On 24th April 1950 the plaintiff instituted this action against the defendant claiming that the defendant (as Joseph's successor-in-title) was under an obligation to sell the property to him for Rs. 350 in terms of the condition stipulated for his benefit in P2.

The defendant pleaded by way of defence that he was under no contractual obligation to sell the property to the plaintiff. As I understand the recorded submissions made on his behalf at the trial, it was argued that the stipulation in P2 was bad for want of mutuality, and that only Lucia (but not the plaintiff) had a remedy to enforce the contract against Joseph (but not against the defendant).

The rights and obligations of the parties under P2 and P3 were governed by the Roman-Dutch law, under which system a stranger to a contract is entitled to claim the benefit of a stipulation made in his favour provided that he accepts it within the prescribed period-Mutual Life Insurance Co. of New York v. Hotz 1[(1911) S. A. A. D 556.]. This principle has been recognised by the Courts of this country Jinadasa v. Silva 2[(1932) 34 N. L. R. 344.] and Marthelis Appuhamy v. Peiris 3[(1946) 47 N. L. R. 78.]. The rule enunciated in these cases is subject only to the qualification that, until the benefit stipulated for has been accepted by the third party, he can be deprived of it by agreement between the contracting parties without reference to him-Van der Plank v. Otte 4[(1912) S. A. A. D. at 353.]. Watermeyer, C.J. states that the promisor can also be released unilaterally by the

promisee from his contractual obligation " at any time before the third party's inchoate right has been perfected by acceptance communicated to the promisor "-C. I. R. v. Estate Crewe 1[(1943) S. A. A. D. 656 at 674.].

Let us apply these rules to the present case. It is not disputed that the plaintiff had, at some stage within the five-year period available to him, accepted the benefit of the stipulation in his favour contained in the deed of donation P2. The precise date of acceptance was, however, not investigated in the lower Court because it w