QUASI CONTRACT

MEANING OF QUASI CONTRACT

Under certain circumstances, a person may receive a benefit to
which the law regards another person as better entitled, or for
which the law considers he should pay to the other person, even
though there is no contract or agreement. Such relationships are
termed “quasi-contracts”, because, although there is no contract
or agreement between the parties, they are put in the same
position as if there were a contract between them. These
relationships are termed as quasi-contracts or constructive
contracts under the English Law and “certain relations
resembling those created by contracts” under the Indian Law.
 
The basis of quasi-contractual liability is unjust enrichment and
the liability arises by implications of law, and not out of any
agreement as in the case of contract.
• Contractual obligations are voluntarily created
by free consent through proposal and
acceptance.
• In some cases, some obligations though not
contractual but are treated as
contractual by law.
• In fact there is no contract but there is one in
contemplation of law i.e. quasi
contract.
• law of quasi contract, is also known as the law of
restitution.
• Sec. 68 to 72 deals with five kind of quasi
contractual obligations. They are as follows:
 Section 68: Supply of necessaries
“If a person, incapable of entering into 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 has furnished such supplies is entitled to be
reimbursed from the property of such incapable person.”

Illustrations: The following illustrations are appended to the

section:
• A supplies B, a lunatic, with necessaries, suitable to his
condition in life, A is entitled to be reimbursed from B’s
property.
• A supplies the wife and children of B, a lunatic, with
necessities suitable to their condition in life. A is entitled to
be reimbursed from B’
 Essential Elements of the Section
• If a person supplies necessaries to a person
who is incapable of contracting or to any one
whom he is legally bound to support;
• The necessities must be suited to his condition
in life;The person supplying the necessities is
entitled to be reimbursed; but
• The liability of such person incapable of
contracting is limited to his property or in other
words he incurs no personal liability for the
obvious reason that he is incompetent to
contract.
 Meaning of “Necessities”
• It is clear that the person supplying the ‘necessities’ shall be
entitled to reimbursed only when the necessities are suited to the
condition in life of the incapable person. “Things necessary are
those without which an individual cannot reasonably exist”. The
word ‘Necessities’ has been used here in a technical sense. It
includes not only the bare necessities of existence such as
clothes and foods, but all things that may be reasonably
necessary suited to the minor’s condition in life, e.g., a watch or a
bicycle. But the articles of luxury are by no means necessaries.

• Expenses for minor’s education, his sister’s marriage, expenses

incurred in funeral of minor’s parents, expenses incurred for
necessary litigation, etc. have generally been held as necessities.
Expenses for minor’s marriage have also been held to be
‘necessaries’.
Case: Chapple v Cooper (1844)

A young widow was sued successfully for

the funeral expenses for her late husband,
as these services were regarded as
necessaries. Point of law is that if a person
orders a service that is required and
suitable for their condition in life at the time
of sale and deliver, they liable. However,
the onus is on the party supplying the
goods/service to prove they are
necessaries.
Case: Nash v Inman(1908)

A tailor (N) supplied 11 fancy waist coats

to a Cambridge undergraduate. Held these
were not necessaries because the minor
had already had sufficient quantity
(provided by his farther) therefore the
minor need not pay for them.
 Point of law: If a minor orders something
that they already have sufficient quantity of
then those items can’t be necessaries.
 Section 69: Payment by an
interested person
“A person who is interested in the payment of money which
another is bound by law to pay, and therefore pays it is entitled
to be reimbursed by the other.”
 
Illustration: B holds lands 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 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 to the
Government the sum due from A. A is bound to make good to B
the amount so paid.
Essential Elements of the Section

• The payment made should be bona fide

for the protection of one’s interest.

Case: Exall v. Partridge, (1799) 8 Team R.

308
P left his carriage on D’s premises. D’s
landlord seized the carriage as distress for
rent. P paid the rent to obtain the release
of his carriage. Held, P could recover the
amount from D.
• The payment should not be a voluntary one.

Case: Macclesfield Corporation v. Great

Central Rail., (1911) 2 K.B. 528
A canal company owned a canal and was under a
statutory duty to keep the bridge on the canal
under repair. The bridge fell into disrepair and the
plaintiffs, the highway authority, called upon the
canal company to repair it. When the canal
company failed to do so, the plaintiffs themselves
repaired the bridge and bought an action to
recover the money paid. Held, the plaintiffs could
not recover as they acted as mere volunteers.
• The payment must be such as the other party
was bound by law to pay

Case: Brook’s Wharf Ltd. V. Goodman

Bros., (1937) 1 K.B. 534
W was the owner of a warehouse. G
imported certain goods and kept them in the
warehouse. The goods were stolen without
any negligence on the part of W. The
authorities made a demand on W for the
payment of the custom duties which W paid.
Held, W could recover the amount from G.
Section 70: Obligation to pay for
non-gratuitous acts
“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.”
 
Illustrations:
• A, a tradesman, leaves goods at B’s house by mistake. B
treats the goods as his own. He is bound to pay for them to A.
• 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.
 Essential Elements of the Section
In Kisorilal v. The State of M.P., the
Rajasthan High Court held:
“In order to attract Section 70 of the Contract
Act, three conditions are required to establish
a right of action at the suit of a person who
does anything for another:
• The thing must have been done lawfully.
• The person doing the act should not have
intended to do it gratuitously.
• The person for whom the act is done must
have enjoyed the benefit of the act.”
Case: Danodar Mudaliar v. Secretary
of State for India, ILR (1894)

In this case, the Government effected

repairs of a tank which irrigated eleven
villages. Some of the irrigated villages
belonged to Zamindars who enjoyed
benefit of the said repairs. It was,
therefore, held that they were liable to pay
their contribution towards the repairs of the
said tank.
Section 71: Responsibility of finder of
goods
“A person who finds good belonging to another and takes
them in his custody, is subject to the same responsibility as
a bailee.”

Illustration:
F picks up a demand on the floor of S’s shop. He hands it
over to S to keep it till true owner is found out. No one
appears to claim it for quite some weeks in spite of the wide
advertisements in the newspapers. F claims the diamond
from S who refuses to return the diamond to F who is
entitled to retain the diamond against the whole world
except the true owner.
Section 71 provides that the responsibility of a
finder of goods is same as of a bailee in the
case of “Bailment”, briefly provides as under:
• Duty to take reasonable care of goods;
• Duty to return goods;
• To make proper use of the goods bailed;
• Duty not to mix his own goods with the goods
of bailor;
• Duty not to question the title of bailor; and
• Duty of bailee to pay increase or profit from
goods bailed
Exceptions of the Section
The finder can sell the goods in the following
cases:
• When the thing found in danger of perishing;
• When the owner cannot, with reasonable
diligence, be found out;
• When the owner is found out, but he refuses
to pay the lawful charges of the finder; and
• When the lawful charges of the finder, in
respect of the thing found, amount to two-
thirds of the value of the thing found.
 Section 72: Mistake or Coercion
“A person to whom money has been paid, or
anything delivered, by mistake or under
coercion, must repay or return it to the person
who paid it by mistake or under coercion.”
 
Meaning of “Coercion” and “Mistake”
It may be noted here that word “coercion’ has
been used here in its general sense and not
as defined under Section 15. Similarly the
word “mistake” has also been used in Section
72 in its general sense.
Illustrations:
• 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.
 
A railway company refuses to deliver up 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.
 Case: N.V. Ramaiah v. State of Andhra
Pradesh AIR 1986 A.P. 361
In the instant case, the plaintiff had a suit for a refund of fee which
was illegally collected. The High Court held that the onus to prove
that by grant of relief he would be unjustly enriched was on the
plaintiff, Jeevan Reddy, J., observed:
“…………. The plaintiff having failed to plead and prove that he has
suffered any loss or injury and that, to offset that loss or injury he
must be granted the equitable relief of restitution, he would not be
entitled to equitable relief under Section 72 of the Contract Act.
Added to the failure to plead and prove in the part of the plaintiff, is
the presumption which the court is entitled to draw, having regard to
the ordinary course of business that every manufacturer passes on
the burden of what he has paid for the raw material to the consumer
of his product. Similarly, every dealer who resells such product to
another, equally recovers the same from his purchaser.