All India Bar Examination (AIBE) 6-VI Previous Year Question Papers with Answers

The correct option is A: Pacta tertii nec nocent nec prosunt. 

This is a Latin maxim that means "agreements of third parties neither harm nor benefit". It implies that a contract cannot create rights or obligations for a person who is not a party to it, unless he has a legal interest in it or has consented to it. This principle is the basis of section 99 of the Indian Evidence Act, which allows persons who are not parties to a document or their representatives in interest to give evidence of any facts tending to show a contemporaneous agreement varying the terms of the document. This means that such persons can prove that the document does not reflect the true intention or understanding of the parties, and that there was another oral or written agreement that modified or contradicted the document. This may affect their rights or interests in relation to the subject matter of the document.

For example, if A and B make a contract in writing that B shall sell A certain cotton, to be paid for on delivery, and at the same time they make an oral agreement that three months' credit shall be given to A, this oral agreement cannot be shown as between A and B, as it would violate section 92 of the Indian Evidence Act, which prohibits evidence of any oral agreement or statement to vary the terms of a written contract. However, this oral agreement may be shown by C, a creditor of A, if it affects his interests, as he is not a party to the document and has a legal interest in its enforcement.