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ICA, 1872 : QUASI

CONTRACTS

The Indian Contract Act governs the formation and validity of a contract
in India. A contract is an agreement enforceable by law [Sec. 2( h)]. The ICA,
1872 Sec. 10 lays down that in order to constitute valid contract, an
agreement should have all the essentials of a valid contract. It is valid
agreement which gives rise to legal obligation. But in some·circumstan ces
in the absence of an agreement obligations are created by the law.
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1 9.2
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QUASI
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CONTRACTS.: MEANIN,
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In some situations there is neither agreement nor consensus-ad-idem

between the parties, but yet, the law imposes obligation on one party and
confers a right in favour of other. For instance, a finder of goods is under
an obligation to restore the goods to the real owner, if traceable and he
must take the reasonable case of the goods. These obligations have been
termed as 'certain relations resembling those created by the contracts'
under Indian law and they are known as quasi or constructiv e contracts
under Englistt law. These contracts are also known as implied-in-law
contracts. The difference between quasi and real contract is that in case of
quasi contract the parties do not intend to create a contract.J

165
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UNIT l • INDlAN CONTRACT ACT, 1872

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t EXAMPLE.
A doctor is d:,ivr'11g down the highway and finds B lying in_u_n con;;;;;;
state on the right side of the road. He stops his car _and admt~ t.~·ters e1ner.
s
g<''1(V treatment that saves B precious life. Even if B, the victim was not
aware tl1at the services had been rendered by the doctor, yet he received a
,·aluahle benefit. Here the requirements of quasi cont~act have been ful.
filled and t lzerefore B is under an obligation to pay for i t to the doctor. If B
fail,; to do so, the court can apply the doctrine of quasi contract and orderB
tu pay A, i.e., the defendant has to pay for the services of the plaintiff.

Quasi contracts are based on the doctrine of 'unjust enrichment'.

Lord Mansfield, who is considered to be the real founder of such obliga.
tions explained the doctrine of unjust enrichment for the first time in Moses
vs. Macfer Ian ( 17 60) that Law as well justice should try to prevent
"unjustment enrichment': that is, enrichment of one person at the cost of
another.

CASE LAW: Moses vs. Macferlan (1760)

Facts : A issued four promissory notes to Band the latter endorsed them
to C The agreement provided that B shall not be liable on the endorse-
ment. Even then C sued Bon the endorsement. Held, B was liable despite
the agreement. B was thus compelled to discharge his liability which was
exduded by him but he sued to recover back his money. He could get
back his money under the law. In this case Lord Mansfield observed that,
· "The gist of this kind of action, is that defendant, upon the circumstances
of the case, is obliged by the ties of natural justice and equity to refund the
money".

Law of quasi-contracts is also known as the law of restitution.

Section 73 of the Act provides that, "When an obligation resembling those
created by contract has been incurred and has not been discharged, anY
person injured by the failure to discharge it, is entitled to receive the sarne
compensation from the party in default, as if such person has contracted
to discharge it and has broken his contract."
Thus, it follows from above that when the person fails to discharge his
obligation arising out of Quasi-contract, another part . t'tled to exer·
. 'f h y 1s en 1
cise legal reme d1es as 1 t e contract is broken.
 167 CH. 9 - JCA, l 872 : QUASI CONTRA CTS Para 9.3

~ 9.3 KINDS OF QUASI-CONTRACTS

' .

Sections 68 to 72 provide for five kinds of quasi-contractual obligations,

which are discussed as follows :
( i) Supply of necessaries to incomp etent persons (Sec. 68)
( ii) Payme nt by an interes ted person (Sec. 69)
( iii) Obligation of a person enjoying benefit of non-gr atuitou s act (Sec.
70)
( iv) Responsibility of finder of goods (Sec. 71)
( v) Money paid or goods delivered by mistake or under coercio n (Sec.
72)
9.3.1 Supply of necessaries to Incompetent Persons.
Section 68 lays down: "If a person, incapable of entering into a contra ct, or
any one whom he is legally bound to suppor t is supplied by anothe r person
with necessaries suited to his condition in life, the person who has furnish ed
such supplies is entitled to be reimbu rsed from the proper ty of such
incapable person."
,,
i EXAf.APLES 1
1. A supplie s B, a lunatic, with necessaries suitable to his condition in life.
A is entitled to be reimbu rsed from B s property.
2. A supplie s the wife and childre n of B, a lunatic, with necessa ries
suitable to their condition in Zife. A is entitled to be reimbu rsed from B s
property.

Note. For details refer to Chapte r 4 'capacity of parties to contra ct'.

9.3.2 Payme nt by an Interested Person. Sectio n 69 lays down : "A person
who is interes ted in the payme nt of money which anothe r is bound by law
to pay, and who therefo re pays it, is entitled to be reimbu rsed by the other.»
.. . . -. ' - ,,,

~ EXAMPLE.'
B holds land in Bengai on a lease granted by A, tlze zamindar. The revenue
payable by A to the Govern ment being in arrear, lzis land is advertised for
sale by the Govern ment. Under the revenue law, the conseq uence of such
s
sale will be the annulm ent of B lease. B to preven t the sale and the conse-
quent annulm ent of his own lease, pays the Govern ment the sum due from
A. A is bound to make good to B the amoun t so paid.
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UNIT I - INDIAN CONTRACT ACT, 1872

The following condition s must be satisfied for applicability of Sec. 69:

( z) The plaintiff must be interested in making the payment. The Pa
ment must be made for the protection o f ones own interest. Y• I •

( iz) The plaintiff himself should not be bound to pay• If under join
promises he has discharged joint liability, he cannot maintain a Sui:
for the recovery of that amount under Sec. 69. But a suit for his
contribut ion can be filed by the joint promisor under Sec. 43 of the
Act [lagpatiraju vs. Sadnusan nama (1916)].
( iii) The defendan t should have been 'legally bound by law' to pay.
( iv) The payment should have been made to another person and not to
himself.
[In Secretary of State for India vs. Fernande s (1907)]. Certain land was held
on lease by the for est departme nt of the Government. Arrears of revenue
were due for the landlord. The revenue department advertises his land for
sale. The for est departme nt made payment of the· revenue. Held, the
payment was made by one departme nt of the Government to another
departme nt of the Government and as such it was not a payment made to
another person. It could not be recovered under Sec. 69.
111 ·. "' .. . .. ·,.,.: ,._ '. ,.:p
f:C~~~:lf'yY ~/Brook's Wharf vs. Goodman Bros. (1937)
Facts : W was a owner of a godown. G imported certain goods and kept
them in the godown. The goods were stolen without any negligence on the
part of W. The authorities made a demand on W for the payment of cus-
tom duties which W paid. Held, W could recover the amount from Gun-
der Section 69.

fEAil~::71 *Tulsa Kunwar vs. Jag~shwar Prasad (1906)

t. ... I< ,, " '. . ) , •. •

Facts: A's goods were wrongfully attached to realize the arrears of Gov-
ernment revenue due by B. A paid the dues to the Governme nt to save his
property. Held, he was entitled to recover the amount from B.

9.3.3 Obligation of a person enjoying benefit of non-gratuitous act. Section

70 lays down : "When 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
compens ation to the former in respect of, or to restore, the thing so done
or delivered."
 t69 CH. 9 - ICA, 1872 : QUASI CONTRACTS Para 9.3
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: EXAMPLES J·
•
1. A, a tradesman, leaves goods at B s house by mistake. B treats the goods
as his own. He is bound to pay A for them
2. A sav~ B s P_roperty from fire, A is not entitled to claim compensation
.
from B, zf the circum stance s show that he intend ed to act gratuitously

ied:
For application of this section the following conditions must be satisf
(t) Services should have been rende red lawfully and in good faith.
(it) The perso n rendering services should not have intended to act gra-
tuitously.
( iii) The perso n for whom the act is done is not boun d to pay unles
s he
had the choice to reject the services.
( iv) Services should have been rende red without any reque st
( v) The defend ant must have enjoyed or derived a direct benefit from
the paym ent or services.
are
It may be noted that section 70 is not applicable in case of persons who
no
incompetent to contract, e.g., minors etc. Therefore, they are unde r
. obligation to compensate the other party for any benefit derived by them.
Thus both the parties must be competent to contract.
9.3.4 Responsibility of finder of goods. Section 71 lays down : "A
person
is
who finds goods belonging to anoth er and takes them into his custody,
subject to the same responsibility as a bailee."
,
Although there is no agreement between the owner and finder of the goods
the
the law implies an agree ment between the two and this section places
finder in the same position as that of a bailee.
Obligations of finder of lost goods
(z) To take reasonable care of the goods as a man of ordinary pru-
dence would take care of his ·own goods. (Sec. 151 ).
{fr) To take all necessary steps to trace its true owner.
( iii) Not to make use of those goods.
( iv) To return the goods to the true owner, it found.
Rights of finder of goods
(t) To keep possession of goods as against every one except the true
owner.
~17· / 1 /Para 9.3 UNIT I - INDIAN CONTRACT ACT, 1872
170

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( it) To make claim for expenses incurred by him for maintenance of
goods.
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( iii) To sue the owner for reward if any
( iv) To exercise right of lien over the goods for expenses and reward. But
he cannot sue the owner for these expenses.
( v) To sell the goods. According to Sec. 169, a finder of goods may sell the
goods in the following circums tances :
(a) When the owner cannot, with reasona ble diligence, be found
out;
( b) When the thing is in danger of perishing or of losing the greater
part of its value.
( c) When the owner is found out, but refuses to pay the lawful
charges of the finder ; and
(dJ When the lawful charges of the finder in respect of the thing
found, amount to two-third of its value.

r·cASE
...
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-LAW--:~*Hollins vs. Fowler
,

I • Facts: H picked up a diamond from the floor of F's shop and handed it
over to him. Inspite of best efforts the owner could not be found out. After
some weeks, H tendered to F the lawful charges incurred by him for find-
ing the true owner and asked him to return the diamond to H, but F re-
fused to do so. Held, F must return the diamond to H as H was entitled to
retain it against the whole world except the true owner.

9.3.S Money paid or goods delivered by mistake or under coercion. Section

72 lays down : "A person to whom money has been paid, or anything
delivere d, by mistake or under coercion, must repay or return it."
The term·s mistake and coercion are used in Sec. 72 in its general sense and
do not carry ·the same meaning provide d in relation to free consent.

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 toB.

Paymen t under mistake in this section means the paymen t which was not
legally due. Money was paid thinking it was due but in fact it was not due,
t71 CH. 9 - ICA, 1872: QUASI CONTRACTS

For instance, income tax, or sales tax paid under mistake can be recovered.
J-{owever money paid under natural obligation cannot be recovered.
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; EXAMPLE.
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 illegal and excessive.

This section covers those cases where money is paid under threat of
attachment of property. Similarly, money paid, under protest on getting
threat from the Governmen t that on failure's to pay the facility ( e.g.,
electricity or water) will be withdrawn, can be claimed under coercion in
this section.
The mistake in this section includes within its scope a mistake of law as well
as mistake of fact.

Sales Tax Officer, Benaras vs. Kanhiya Lal Mukund

Lal Saraf (1959)
Facts : K had paid sales tax on his forward transactions under the U.P.
Sales Tax Act. Subsequently the levy of sales tax was held to be ultra vires
by the High Court of Allahabad. K claimed the refund of the tax under
mistake of law under Section 72 of the ICA. Held that Section 72 did not
draw distinction between mistake of law and mistake of fact and there-
fore K was allowed the refund of payment

This Section does not apply where payment has been made for time barred
debt. Similarity, money paid knowingly fully well that contract had become
void i.e., the payment made in disregard of law, does not fall within the
purview of this section.

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the.~eaning and tati~nale of quasi .contracts (R~f. Para 9.i) ·:: ,:':):-. :
~ote on "Quasi-contract•. ·CZOOS) (Ref. Para 9.2)' --·_ -:·: --: </ :\, -~-
~lition of a finder of lost goods. (2010) (Ref. P~int 4 of ?~~9.3:r
-· are b~~d o,n m"xim 11-Ne~c;> debet locu~et~--e;\ Ii~ ,,- ·· ,-..,,_-
hed at the cost of od:\ers). 5'q>lain ~ ·
·1011) '(R.ef. P!114a 9~} _. _ ' _.
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 UNIT 1 . INDIAN CONTR ACT /\ CT, 1872

~-•A quasi-nmtrad i~ 11ol n c.:u11lrm:I at ull. It is obligation whkh the ~aw crcat<:\"
Explain thr stutcnwnt ns rccogni1.cd umk·r Indian Contra<.:l Act. (Scrn. I, 20t 2)
(Rd. Para 9.2)
6. •A minor is liahlc to pay for nccessa1ics of life." Comment. (Ref. Para 9.3J
7. Quasi-contract is based upon the principle of equity and ju5t ice. Cornrntnt
(Ref. Para 9.2) ·
8. Distinguish between quasi-contract and formal contract. (Ref. Para 9.2)

PRACTICAL PROBLEMS ~ - - - - - - - - - - - - - -

1. A docs not pay the amount of sales tax and the sales tax authorities bring an
order from the court for attaching A's property. B, a good friend of A, makes
payment to the sales· tax authorities. Can B Later on recover payment from A?
[Hint. No, Bhas made the payment voluntarily which is not for the protection of
his interest. However, if A wants to compensate him, the contract would be
enforceable under Section 25(2).]
B; a passerby,
2. A meets with an accident and falls unconscious on__the,:~~a:d:-Y
brings C, the doctor, in his car who provides IQeqic~-,: , t9¼_ Is, C entitled 1/0{, , , ',

to be paid for his services by A ? , ;"' - y/,,

,, ) // ·'/,/

[Hint. Yes, according to Section 70, Ci~ entiti ~rvices by A

because he has enjoyed the se~ces and--t,, nd to do so
gratuitously.] ,
/.

3. A owes B , l 0,000 and the debt has beco7

to B. Can he recover this amount under,~,
. .
~
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1
, [Hint. No, Section 72 does not apply in :
4. Asalesman from 'Naveen Electroni~~;i',i.,: t:~:,,~Jf4;/f ?~~c~e' at B's place
0
by mistake. Baltreats the same as his o~H~. <~. aits/µsing it Is B bound to
' compensates esman for th e same., ·, , : ':,_ 1e:-~:Y:•4%_.,r,·:5..:,•,;, , ·,_
yY , ,fYZ'y,/,f,, '
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.
;y

(Hint. Yes, A has derived the benefits of_Irtachine deli~ered to him by mistake
therefore, he is bound to compensate the salesman under Sec. 70.]
5. X finds motorbike lying on the road He takes it into his custody and incurs
t 500 in order to put it in the working conditions. Subsequently Y, the real ow11c.>r,
refuses to pay him these charges. Can X recover these charges from y through
the court of law ? · ·
(HIid. No, X cannot file a suit for the recovery of these charges but he can retain
: the ..,.bike, t111,1UCh .charges are paid by real owner, Y.]
6.- 'I/ fCNS io a 1'otel fior a dinner. He finds a mobile phone near his table anJ
d~ti it with 'JI thehotel manager. Inspite of vigorous efforts the owner of the
J73 CH . 4 • KA, I ~72 : OUAS J CON 'I RA< T S

~ 1whikph1\llC'l'0~1ld not lwtrac c-d. Now 'A' reque sts 'IJ lo

return the mobilt: pho11e
h\ him. but B rd USl'S to do so.
cd !
NtlW 'A'filc s a suit again st '/Hor gc1ting hack the mobil e phone . Will he su(..l.c
Gire n.'a-"'ons. (2()()(-i)
r of g,,ods. In the
[Hint. It is the duty of finde r of goods lo fiml out the true owne
ger of the hotel
tzi,·cn case A can get back the mobil e phon e from B, the mana
of goods again~t
bt,'Cause the finde r of the goods is entitl ed to retain posse ssion
s vs. Fowle r].
thl" whole world excep t the true owne r. Ref. to case: Hollin
payab le by 8
7. A purch ased a piece of plot from B. Some past muni cipal tax.cs
issue d an order to A
on the plot were not paid by him. The Municipal Autho rity
would be attach ed.
to pay the past unpai d taxes on the plot failing which the plot
State with reaso ns.
A paid the said amou nt Can A recov er this amou nt from B?
(2009)
in the paym ent of
[Hint. Secti on 69 lays down that a perso n who is intere sted
to be reimb ursed
money due by anoth er and who there fore pays it, heis entitl ed
In the given
by the other . This right is subje ct to requi reme nts conta ined u/ s 69.
by A Henc e A can
case B is boun d to pay municipal taxes which were paid
recov er the amou nt paid from BJ.

- - - - --
TRUE OR FALSE STATEMENTS - - - - - - - -

State with reaso ns whet her the following shltem ents are
true or false :
term. (2009)
(1) Quasi contr acts are not contr acts in the real sense of the
( iz) Quas i contr acts or const ructiv e contr acts are valid.
hmen t.
(iiz) Quas i contr acts are based on the principle of unjus t enric
( iv) Ha mino r is suppl ied by anoth er with neces saries
, suited to his condi tion
in life, he is perso nally liable to pay.
f of anoth er, can
(v) Any perso n who volun tarily make s a paym ent on behal
recov er it.
(vi) H the benef iciary of a non-g ratuit ous act of a perso
n is a minor, the pay-
ment can be recov ered from his prope rty.
(vii) A perso n enjoy ing the benef its of lawfu l non-g ratuit
ous acts of anothc:-r
perso n, is boun d to pay anoth er.
ity as a bailee.
(viii) A finder of lost goods is subje ct to the same responsibil
(it) A perso n to whom mone y has been paid, or anyth ing ddive
r~J. by mis-
take or unde r coerc ion, must repay ur rd urn it.
s as again st
(x) A finde r of lost good s is entitled to kr<.·p poss~ssion of good
every one excep t the true owne r.
 1872
UNIT I - INDIAN CONTRACT ACT,

Hints to True or False Statem ents

True Statem ents : ( z), ( it), ( iii), ( vii), ( viii), ( ix) and (x)
False Statem ents :
( iv) If a minor is supplied by anothe r with necess aries suited to his conditio
in life, he is not personally liable to pay but his proper ty is held liable (Sen
C.
68).
( v) Any person who voluntarily makes a payme nt on behalf of another, can.
not recove r it.' Such person must b~ interes ted in makin g the payment
(Sec. 69). · · - ' , · ··

( v,) If the benef ici~ ~fa non,:g i;a~t ~-a'.Ct ~fapers<_>n is a minor, the pay.
ment canno t be rec9y~t~d-frp.rp,.Ns proper ty (Sectio n 70). Thus both the
parties must be
competeiit,ict coniract. -
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