JAMIA MILLIA ISLAMIA

SUBJECT: CONTRACTS
TOPIC: CONTRACTS AND QUASI CONTRACT
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SUBMITTED TO: Dr S.Z AMANI

SUBMITTED BY: AARAV ANAND

B.A.L.L.B (1ST SEMESTER)
SELF FINANCED
 Acknowledgment

I am very glad that I got an opportunity to learn and imbibe so many

things while making this project. It helped to a great extent in
developing researching skills which are very important for a student
of law. First and foremost, I would like to thank to Dr.SZ AMANI for
giving us this opportunity and always being such a great support.
Secondly, I would like to thank my friends and family who are always
there for me and without whom I won’t be successful in achieving
anything in life.
.

Thank you
 CONTRACT
An agreement between two or more parties creating obligations that is
enforceable or otherwise recognizable at law. A contract is an agreement
enforceable by law. Contracts are promises that the law will enforce. The
law provides remedies if a promise is breached or recognizes the
performance of a promise as a duty. Contracts arise when a duty does or
may come into existence, because of a promise made by one of the parties.
To be legally binding as a contract, a promise must be exchanged for
adequate consideration. Adequate consideration is a benefit or detriment
which a party receives which reasonably and fairly induces them to make
the promise/contract. For example, promises that are purely gifts are not
considered enforceable because the personal satisfaction the grantor of the
promise may receive from the act of giving is normally not considered
adequate consideration. Certain promises that are not considered contracts
may, in limited circumstances, be enforced if one party has relied to his
detriment on the assurances of the other party. A contract means an
agreement which is enforceable by law. An agreement consists of reciprocal
promises between the two parties. In case of contract, both the parties are
legally bound by the promise made by him. A contract to perform a
promise could arise in these ways: by agreement and contract, standard
form contracts, and promissory estoppel.

Quasi Contracts
English Law identified quasi-contractual obligations first, the framers of
the Indian Contract Act modified it and placed it in the Act as- “certain
relations resembling those created by contracts”. Therefore the elements
that are present in the English Quasi-contract are also found in that of the
Indian Contract Act.

Though the Indian contract Act, 1872 does not define quasi contract, it
calls them relation resembling those of contracts. However, a quasi-
contract may be defined as, “a transaction in which there is no contract
between the parties; the law creates certain rights and obligation between
them which are similar to those created by a contract. “An obligation
created by law for the sake of justice; specif., an obligation imposed by law
on parties because of relationship between parties or because one of them
would otherwise be unjustly enriched. It’s not a contract, but instead is a
remedy that allows plaintiff to recover a benefit conferred on the
defendant. These types of contracts are quasi contract or restitution that
fall in the third category of quasi contracts or restitution.The procedural
term ‘quantum merit’ has persisted and is sometimes used inexactly as a
synonym for the more general term ‘quasi contract’ which refers to any
money claim for the redress of unjust enrichment. Basically in other words,
a contract made by law for reasons of equity with no statement of consent
is a quasi-contract. Quasi contracts bring a situation which imposes
obligations or duties upon the parties by law rather than the assent given
by them to the contract terms.

There are many situations in which law as well as justice requires that a
certain person be required to confirm an obligation, although he has not
broken any contract nor committed any tort. For example for Quasi
Contract would be worthy of Quoting for the better understanding of
Quasi Contract, if a person in whose home certain goods have been left by
mistake is bound to restore them. This shows that a person
cannot entertain unjust benefits at the cost of some other person. Such kind
of obligations are generally described, for the want of better or
more appropriate name, as Quasi Contractual Obligations. This would be
better to explain it up that Quasi contract consists of the Contractual
Obligation which is entered upon not because the parties has consented to
it but because law does not allow a person to have unjustified benefit at the
cost of other party. These are not contracts but these fictional agreements
arise to ensure equity as it would be unfair if a party gets undue advantage
at the cost of other. The liability exists in quasi contracts on the basis of the
doctrine of unjust enrichment. Take for an example a person in whose
house certain goods have been left incidentally, so that person is bound to
restore them. There will be an obligation on the house owner to restore the
goods safely that is imposed by law rather than any agreement between the
parties. Such type of contractual obligations are termed as quasi
contractual obligations. Basic elements of quasi contracts are:

Liability

In general, the quasi contract doctrine is applied in disputes regarding

payment of goods delivered or services rendered. If there is no valid
contract between the parties, the main question that arises in such
situations is the liability of the defendant. As the aim of this doctrine is to
prevent unjust enrichment of one party, at the expense of the other, the
damages are usually restricted to the value of the services rendered or the
cost of the materials delivered. In short, the liability of the party who has
enjoyed unjust benefits is limited to the value of that benefit only.

Quasi Contract and Implied-in-fact Contract

The characteristic feature of a quasi-contract is the absence of a contract or

a mutual consent between the parties. Quasi contracts are often confused
with implied-in-fact contracts. Implied-in-fact contracts are also not
contracts in the true sense, as they lack a written agreement. In case of the
latter, even though there is no contract between the parties as per the facts,
the actions and words of the parties amount to mutual consent over the
disputed matter. The difference between the two can be illustrated with an
example. A approaches a doctor for treatment. Here, there is a mutual
consent between A and the doctor. As A expects treatment from the doctor,
the doctor expects payment from A for his services. This is an example of
implied-in-fact contract, wherein the conduct of the parties suggested a
mutual consent. But, in a quasi-contract (as per the example given above),
the parties to the dispute did not even know each other. So, there is no
question of consent between them.

Theories behind Quasi Contracts

So far as there was not an established rule of Quasi Contractual obligation

the English Lawyers were content to enumerate the cases of the Quasi
Contract for which they are provided a remedy as to many species
of “Indebitatus Assumpsit (A form of action in which the plaintiff alleges
that the defendant has undertaken a debt and has failed to satisfy it.), but
they evaded the odious task of rationalization. But as soon as the urge was
felt to explore their juristic basis, controversy was born. The quasi contract
are covered in chapter V of the Indian Contract Act, 1872 under the
heading of ‘Of certain relations and resembling those created by contract’.
I feel that the Indian contract act, 1872 favors the term ‘quasi contract’ but
partially as it is not a real contract because if they would have been in
support of this term, then they would have included this term in Chapter V
of the act rather than giving the heading ‘Certain Relations resembling
those created by Contract’ but they mean by this title that they are
referring to quasi contracts. The term ‘quasi-contract’ is avoided in the
chapter but this chapter is about the doctrine of quasi contracts.Nothing is
precisely clear about the quasi contracts. The founder of quasi contract
based on the theory of unjust enrichment was Lord MANSFIELD who
explained such obligations based upon the law as well as justice to prevent
undue advantage to one person at the cost of another. The concept was first
taken up in the case Moses v. Macferlan . The facts of the case are as such:
Jacob issued four promissory notes to Moses and Moses indorsed them to
Macferlan, excluding by a written agreement, his personal liability on the
endorsement. Even so Macferlan sued Moses on the endorsement and he
was held liable despite which he had excluded and, therefore, sued to
recover back his money from Macferlan.

He was allowed to do so. After stating that such money cannot be recovered
where the person to whom it is given can “retain it with a safe conscience”,
LORD MANSFIELD continued:

A liability of this kind is hard to classify. Since it partly resembles liabilities

under the law of tort and partly it resembles contract since it owed to only
a party and not a person or individual generally. Therefore, it comes within
the ambit of an implied contract or even natural justice and equity for the
prevention of unjust enrichment.

Then came the theory of implied contracts which became very popular
among the courts and the theory of Lord MANSFIELD were discarded
quite often. In the case of Sinclair v. brougham liabilities under the name of
quasi contract were taken which were against the law and not within its
ambit. So later on, it was decided that the doctrine was going against the
law and hence the doctrine of unjust enrichment prevailed over this theory
after the case of Fibrosa Spolka Akeyjna v. Fairbairn Lawson combe
Barbour Ltd.In this case remedies arising from such obligations neither
constitute contract nor torts. They fall into category different form these
two and that is ‘quasi contract or restitution’. It was also observed that the
precious theory was against public policy and ultra vires to the law. The
principle of unjust enrichment requires: first, that the defendant has been
‘enriched’ by the receipt of a “benefit”; secondly, that this enrichment is
“at the expense of the plaintiff”; and thirdly, that the retention of the
enrichment be unjust.
Position in Indian law

Chapter V of the Indian contract Act, 1872 deals with the “certain relations
resembling to those created by contract”. It incorporates those obligations
which are known as “Quasi Contracts” under English law. A person is
obliged to compensate another although the basis of this obligation is
neither a contract between the parties, nor any tort on the part of the
person who is bound to compensate. The basis of the obligation is that no
one should have unjust benefit at the cost of the other. If A gets unjust
enrichment at the cost of B, A has an obligation to compensate B for the
same. For instance, A and B jointly owe 100 rupees to C. A alone pays the
amount to C and B, not knowing this fact, pays 100 rupees over again
to C. C is bound to repay the amount to B.

In an action for unjust enrichment, the following essentials have to be

proved:

 The defendant has been “enriched” by the receipt of a “benefit”.

 The enrichment is “at the expense of the plaintiff”.

 The retention of the enrichment is “unjust”.

Similarities between Quasi Contracts and Contracts

The result of contract and quasi contract are similar to that of contracts. So
far as the claim for damages are concerned they are very similar to that of
contracts because section 73 of the Indian Contract Act, 1872 provides
remedies for the breach of quasi contracts as provided for the breach of
express contracts in various sections of the Indian Contract Act, 1872.
Remedies are available under quasi contract under Indian contract act,
1872.

Distinction between Quasi Contracts and Contracts

A “quasi” or constructive contract is an implication of law. An “implied”

contract is an implication of fact. In the former the contract is a mere
fiction, imposed in order to adapt the case to a given remedy. In the latter,
the contract is a fact legitimately inferred. In one the intention is
disregarded; in the other, it is ascertained and enforced. In one, the duty
defines the contract; in the other, the contract defines the duty. Any
contract has two essential features i.e. agreement and obligation.
Agreement arises when a party puts forwards a proposal and when that
proposal is accepted by the other party. Obligation comes into picture as
law imposes it over the parties but is linked to the agreement between the
parties. Therefore, a contract is a legally enforceable agreement. Basically
contracts are express or implied by law. The former comes into picture by
the conduct or words or negotiations between the parties. The contract that
implied by law is not a real contract. It would be unfair to term it a
contract. It arises when law irrespective of agreement aims at meeting the
ends of justice. A distinction is set forth in Keener on these types of
contracts. The learned author says that:-

He says that the quasi contracts basically contracts implied by law denote
the nature of evidence established through which the plaintiff can claim but
the obligation arises out by the law. Though the defendant would not
intend to assume any obligation but the law will impose an obligation
because to avoid undue advantage to him at the cost of the plaintiff.

It has been observed that these contracts and quasi contracts are the
matter of practical importance. The concept revolves around the
agreement and obligations between parties. The quasi contracts differ from
contracts that are generally express as they contains each terms in words
while in the latter, the terms come into existence by the conduct of the
parties. In one case it appears to be a fiction and in the other appears to be
a fact that is legitimately inferred. In one intention is discarded and in the
other intention is ascertained and enforced. In one duty defines the
contract while on the other hand contract defines the duty. Quasi contracts
are not entered by implied words but are operated on the basis of the
conduct of the parties. It seems to be unfair that the law implying a
promise on someone whose declarations disprove any intention but still this
practice is in functioning. The express contracts are approved by parties as
a matter of law both sharing equal interests with equal consequences
though the conditions are stated expressly while in the case of quasi
contracts the law imposes obligations taking into view the conduct of the
parties in order to prevent undue advantage to one party at the cost of
another. These types of contracts are those which are referred to
distinguish in practice form obligation quasi ex contractu and to pay for
benefits conferred. If the situation arises where a mistake is not to the doer
when the benefit is incurred, the obligation is quasi contractual. The
concept of such types of contracts has been in existence upon the principles
of honesty, justice and fairness. Basically the most fundamental principle to
make quasi contract come in existence is upon the principle of justice to
ensure no one ought to have unjustly enrich himself at the expense of
another. In Mahabir Kishore v. State Of Madhya Pradesh, the
requirements of the principle of unjust enrichment were laid down by the
Hon’ble Supreme Court as follows:

 The defendant has been ‘enriched’ by the receipt of a benefit.

 This enrichment is at the expense of the plaintiff

 And the retention of unjust of the enrichment is unjust

CONCLUSION
It is proved by the research that contracts and quasi contracts are far
different. They are not contracts but are obligations that the law imposes
upon someone to prevent undue advantage to one person at the cost of
another. The Indian Contract Act, 1872 covers these types of obligations
under the Chapter V under the title ‘OF CERTAIN RELATIONS
RESEMBLING THOSE CREATED BY CONTRACT’ but the act does not
include the term ‘quasi contract’. It could be because of the reasons that
the act also wants to tell that these type of obligations are far different from
real contracts and they must not be called quasi contracts. It is the law that
compels parties who get unduly advantaged to compensate the other party
on the principle of equitable justice. The foundation of quasi contracts is
based on the principles of Equity, Justice and Good Conscience, which
requires that nobody shall benefit himself unjustly, at the cost of others.
This is known as the Principle of Unjust Enrichment. The basis of quasi
contract is that technicality of contract cannot override the requirements of
justice. When something has been done for the benefit of another
person without the waiting for his formal assent as also for the completion
of other formalities, it is expected that the person receiving the benefit must
compensate the other party for the trouble and expenses incurred. The
contract and quasi contract can be distinguished by focusing on the concept
of agreements and obligations by and on the parties respectively. The
unjust principle came from the old maxim of Roman law ‘Nemo debet
locupletari ex aliena jactura’ that means no man must grow rich because of
one’s personal loss.The doctrine of quasi contracts has been an essential
part and aspect of the Indian Contract Act, 1872 in dealing with such
obligations which causes loss to one party over undue benefit to the other
party.
 BIBILIOGRAPHY

[1] Black’s Law Dictionary,9th Edition, p.365

[i] Section 2(h) of Indian Contract Act, 1872

[ii] Kozlowski v. Kozlowski, 395 A.2d 913, 918

[iii] Black’s Law dictionary, 9th Edition, p. 370

[iv] Nallapati Pandruanga Rao v. Vempati Venkateshwara

Rao, MANU/AP/1901/2014

[v] E. Allan Farnsworth, Contracts $2.20, at 103 (2d ed. 1990)

[vi] State of Punjab v. Hindustan Development Board, AIR 1960 P H 585

[vii] K.K Cooperative Group Housing Society Ltd. v. Goel Associates, 2012
SCC Online Del 1053

[viii] Hari Ram Seth Khandsari v. Commissioner of Sales Tax,

MANU/UP/1273/2003

[ix] (1760) 2 Burr 1005at p. 1012 as in cited in Pollock and Mulla, Indian
Contract Act, 1872

[x] Sinclair v. Brougham, 1914 AC 398 as cited in ‘The Modern Law of

Unjust Enrichment and Restitution’ by Gerard McMeel on Page 25

[xi] Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd ,1943
AC 32 as cited in ‘The Modern Law of Unjust Enrichment and Restitution’
by Gerard McMeel on Page 26

[xii] Mahabir Kishore & others v. State of Madhya Pradesh, AIR 1990 SC
313

[xiii] Mulam Chand v. State of Madhya Pradesh, (1968) A.SC.1218 as cited

in Pollock & Mulla on Indian Contract and Special Relief Acts, P.593

[xiv] T & S Inv. Co. v. Coury, 593 P.2d 503 (Okla. 1979)
[xv] A Treatise on the Law of Quasi-Contracts. By William A. Keener,
Kent Professor of Law and Dean of the Faculty of Law in Columbia
College. New York: Baker, Voorhis and Company. 1893. 8vo, pp. xxxii,
470. As in cited in E. Allan Farnsworth, Contracts

[xvi] Union of India v. Solar Pesticides (P) Ltd, AIR 2000 SC 862

[xvii] AIR 1990 SC 313

[xviii] Section 14, Indian contract Act,1872

[xix]Section 2(h), Indian Contract Act,1872

[xx] Section 10, Indian Contract Act, 1872

[xxi] The Modern Law Review,Vol. 9, No. 2 (Jul., 1946), pp. 198-202

[xxii] Moses v. Macfalren (1760) 2 Burr 1005at p. 1012 as cited in Contract

and Special Relief Act by Avtar Singh

[xxiii] 13th Report, Law Commission of India, P.13