QUASI CONTRACT

A quasi-contract' (as distinguished from implied-in-law contract) is a legal substitute for a contract. A quasi-contract is a contract that should have been formed, even though in actuality it was not. It is used when a court wishes to create an obligation upon a noncontracting party to avoid injustice and to ensure fairness. It is invoked in circumstances of unjust enrichment. Quasi-contracts are defined to be "the lawful and purely voluntary acts of a man, from which there results any obligation whatever to a third person, and sometime a reciprocal obligation between the parties."[5] It "is not legitimately done, but the terms are accepted and followed as if there is a legitimate contract. ‘Quasi Contracts’ are so-called because the obligations associated with such transactions could neither be referred as tortious nor contractual, but are still recognised as enforceable, like contracts, in Courts. According to Dr. Jenks, Quasi-contract is “a situation in which law imposes upon one person, on grounds of natural justice, an obligation similar to that which arises from a true contract, although no contract, express or implied, has in fact been entered into by them.” Example X Supplies goods to his customer Y who receives and consumes them. Y is bound to pay the price. Y’s acceptance of the goods constitutes an implied promise to pay. This kind of contract is called a tacit contract. In this very illustration, if the goods are delivered by a servant of X to Z, mistaking Z for Y, then Z will be bound to pay compensation to X for their value. This is ‘Quasi-Contract.’

The principle underlying a quasi-contract is that no one shall be allowed unjustly to enrich himself at the expense of another, and the claim based on a quasi-contract is generally for money. Sections 68 to 72 of the Contract Act describe the cases which are to be deemed Quasi-contracts. (1) Claim for Necessaries Supplied to a person incapable of Contracting or on his account. If a person, incapable of entering into a contract, or any one whom he is legally bound to support is supplied by another person with necessaries suited to his condition in life, the person who furnished such supplies is entitled to be reimbursed from the property of such incapable person (Sec. 68). Examples 1. A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled to be reimbursed from B’s property. 2. A, who supplies the wife and children of B, a lunatic, with necessaries suitable to their conditions in life, is entitled to be reimbursed from B’s property. The above Section covers the case of necessaries supplied to a person incapable of contracting (say, a minor, lunatic, etc.) and to persons whom the incapable person is bound to support (e.g, his wife and minor children). However, following points should be carefully noted: (a) The goods supplied must be necessaries. What will constitute necessaries shall vary from person to person depending upon the social status he enjoys.23 (b) It is only the property of the incapable person that shall be liable. He cannot be held liable personally. Thus, where he doesn’t own any property, nothing shall be payable.

(2) Reimbursement of person paying money due by another in payment of which he is interested. A person who is interested in the payment of money which another is bound by law to pay, and who, therefore, pays it, is entitled to be reimbursed by the other. (Section 69). Example

B holds land in Bengal, on a lease granted by A, the Zamindar. The revenue payable by A to the Government being in arrear, his land is advertised for sale by the Government. Under the Revenue Law, the consequence of such sale will be the annulment of B’s lease. B, to prevent the sale and the consequent annulment of his own lease, pays the Government, the sum due from A. A is bound to make good to B the amount so paid. In order that the Section may apply, it is necessary to prove that: (a) The person making the payment is interested in the payment of money, i.e. the payment was made bona fide, for the protection of his own interest. (b) The payment should not be a voluntary payment. It should be such that there is some legal or other coercive process compelling the payment. (c) The payment must be to another person. (d) The payment must be one which the other party was bound by law to pay. (3) Obligation of a person enjoying benefits of non-gratuitous act. Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore the thing so done or delivered [Section 70]. Examples

1. A, a tradesman, leaves goods at B’s house by mistake. B treats the goods his own. He is bound to pay for them. 2. A saves B’s property from fire. A is not entitled to compensation from B, if the circumstances show that he intended to act gratuitously. In order that Section 70 may apply, the following conditions must be satisfied: (a) the thing must be done lawfully; (b) the intention must be to do it non-gratuitously; and (c) the person for whom the act is done must enjoy the benefit of it. (4) Responsibility of Finder of Goods. Ordinarily speaking, a person is not bound to take care of goods belonging to another, left on a road or other public place by accident or inadvertence, but if he takes them into his custody, an agreement is implied by law. Although, there is in fact no agreement between the owner and the finder of the. goods, the finder is for certain purposes, deemed in law to be a bailee and must take as much care of the goods as a man of ordinary prudence would take of similar goods of his own. This obligation is imposed on the basis of a quasi-contract. Section 71, which deals with this subject, says: “A person who finds goods belonging to another and takes them into his custody, is subject to the same responsibility as a bailee.”24 (5) Liability of person to whom money is paid, or thing delivered by mistake or under coercion (Section 72). A person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it.

Examples

1. A and B jointly owe Rs. 1,000 to C. A alone pays the amount to C and B not knowing this fact, pays Rs. 1,000 over again to C. C is bound to repay the amount to B. 2. A railway company refuses to deliver certain goods to the consignee except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive.

(Notice that the term mistake as used in Section 72 includes not only a mistake of fact but also a mistake of law. There is no conflict between the provisions of Section 72 on the one hand, and Sections 21 and 22 on the other, and the true principle is that if one party under mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise, that money must be repaid)