Quasi contract

Introduction:
 There are many situations in which law as well as justice require that a
certain person be required to conform to an obligation, although he has
neither broken any contract nor committed any tort.
 There are certain obligations, specified in the Indian Contract Act, that
are not actually contracts because they miss one or the other elements of a
contract, but are still enforceable in a court of law. Such obligations are
called Quasi-contractual obligations.
Meaning:
 A voluntary act from which derives obligations subject to a regime close
to the contractual one imposing on the author of the act and a third party,
not bounding by the contract
 Quasi contract deals with rights or liabilities arise from relations
resembling those created by contract.
 It is not a real contract and thus called a non-consensual contract based on
agreement of parties.
Rationale
1. theory of unjust enrichment
 Quasi-contracts are based on the principle of  “Nemo debet locupletari ex
aliena jactura”, which means ‘No man should grow rich out of another
person’s loss’.
1. Lord Mansfield in Moses vs. Macferlan (1760) 2 Burr 1005
The quasi-contractual obligation is based on the principle that law, as well as
justice, should try to prevent unjust enrichment, i.e., enrichment of one person
at the expense of another or prevent a person from retaining his wealth, or some
benefit derived from it, which he is against conscience he should keep.

2. Theory of "implied-in-fact" contract

 Consists of obligations arising from a mutual agreement and intent to
promise where the agreement and promise have not been expressed in
words.
 Such contracts are implied from facts and circumstances showing a
mutual intent to contract, and may arise by the conduct of the parties.
Essentials of a quasi contract
1. imposed by law
2. No operation of contract
 3. Right to personam but not Right to Rem
4. Entitled to recover expenses
Elements Of Quasi Contracts
There are three inherent principles to a quasi-contract:
 The plaintiff must show evidence of the goods or services they should
have been compensated for.
 The defendant must have accepted those goods or services and receive
some type of benefit from them.
 Finally, the defendant must have accepted said goods or services under
unfair circumstances where the plaintiff didn't receive any compensation.
Types:
What is a Quasi Contract? Essentials and Kinds | Indian Contract Act, 1872
(legalpaathshala.com)- short
Long:
1. Claim for requirements supplied to a person unable to contract on his
account (Section 68): –
 If a person, unable to enter into a contract, and if he is supplied with
the necessary things important for his life, the person who is
supplying is entitled to be reimbursed from the property of such
incapable person.
 Illustrations: A supplies with all the necessary things suitable to his
condition in life, and B is a lunatic. Here, A is entitled to be reimbursed
from B’s property.

2. Reimbursement of a person paying money due by another in which he is

interested (Section 69): –

 A person who is interested in the payment of money and also pays it,
which another person is bound by the law to pay.
 Conditions of liability under this section are:
o Payer must be interested in making payment
Munni Bibi v Triloki Nath- His honest belief that he has an interest
to protect is enough.
o the plaintiff himself should not be bound to pay.
Venkata SimhadriJagpatiraju v Sri Lakshmi Nrusimha Roopa
Sadrusannama Arad Dugarazu Dakshina Kavata Dugarazu- Where
a person is jointly liable with others to pay, a payment by him ofthe
others' share would not give him a right ofrecovery under this
section
 o Defendant should be under legal compulsion to pay
the defendant should have been "bound by law" to pay the money.
The words "bound by law" have been held, after some hesitation,
to mean bound by law or by contract.
Rasappa Pillai v Mitta Zemindar Doraisami Reddiar- It is enough
that "the defendant at the suit of any person might be compelled to
pay".
o Payment should be by one to another
Secy of State for India v Fernandes- certain Government was the
tenant of a land and paid to itself out of the rent due to the landlord
the arrears of land revenue due to itself, the Government could not
recover from the landlord. It was a transfer of money from one
head to another within the Government and not 'payment to
another' and though it was done to save the land from being sold in
execution, it did not come within the principle of the section.
 Illustration: if person A pays off B’s outstanding debt, then the latter
must reimburse A under Quasi-contract law.

3. The obligation of a person enjoying the benefit of the non- gratuitous act
(Section 70): –
 Where a person lawfully does something to another, or deliver something
to him gratuitously, here latter is bound to compensate to the former for
the act done.
 However, in the case of State of W.B. v B.K. Mondal & Sons, the the
conditions on which the liability under the section arises were stated:
 What was done or given was legally valid
services should have been rendered lawfully.
State of U.P vs Chandra Gupta & Co- Payment for
extra work done in connection with a contract
without any agreement has been allowed to be
recovered under this section."
 He did not do so gratefully.
Thus, one of the purposes of the section is to assure
payment to a person who has done something for
another voluntarily and yet with the thought of
being paid.
Municipal Council, Rajgarh v M.P. SRTC- A
Municipal Council which constructed and
maintained a bus-stand was allowed to recover
some charges from bus operators who used the
stand though there was no agreement to that effect.
 Request for services creates implied promise to
pay
 it is necessary that services should have been
rendered without any request.
Sib Kishore Ghose v Manik Chandra- Reasonable
compensation may, however, be recovered for
services rendered at request.
 Section would not encourage officious
interference in affairs of others
the person for whom the act is done is not bound to
pay unless he had the choice to reject the services.
Haji Adam Sait Dharmasthapanam v Hameed- It is
only where he voluntarily accepts the thing or
enjoys the work done that the liability under
Section 70 arises.
Illustration: 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.

4. Responsibility of finder of goods (Section 71): –

 A person who finds the goods belonging to another and takes them in
his custody, then he is subject to the responsibility as a bailee.

Duties of the finder of goods

1. The finder has a duty to take reasonable care.

2. He/she has a duty not to use the goods for his personal purposes.
3. He/she has a duty not to mix the found goods with his own goods.
4. He/she has a duty to make reasonable efforts to find the actual owner
of the goods.

Rights of the finder of goods

1. Right to Lien– The right to retain the goods found until he receives
compensation for all the expenses suffered in finding the owner.
2. Right to Sue– If the owner had announced a reward for whoever finds
the good, the finder has the right to sue the owner for such reward or
retain the goods until he is compensated.
3. Right to Sell– The finder of goods has the right to sell the goods in
certain specific circumstances, for example:
i) If the owner could not be found even after reasonable efforts.
ii) If the owner is found but refuses to pay compensation or the lawful charges
of the finder.

iii) If the goods are in immediate danger of perishing if not used.

iv) If the lawful charges of the finder amount to two-thirds of the value of
goods.

5. Liability of the person to whom the money is paid, or the goods delivered
by mistake or under coercion (Section 72): –
 A person who has been paid money, or given anything accidentally or
under coercion, must repay or return it.
 Illustration: A and B jointly owe C 100 rupees, A alone pays C the
amount, and B, not knowing this fact, again pays C 100 rupees. C is
obliged to repay the amount to B.

Restoration of theory of unjust enrichment

 The identification of quasi-contracts with implied contracts restricted the

scope of relief which would have been possible without any such
hindrance under the principle of "natural justice and equity".
 Fibrosa Spolka Akeyjna v Fairbairn Lawson Combe Barbour Ltd- A sum
of money was paid in advance under a contract for the supply of a
machine or 'for the supply of machinery', and the performance was
obstructed by the outbreak of war. Their Lordships allowed the advance
to be recovered back as having been paid for a consideration which had
wholly failed.
 Referring to the ratio decidendi of the decision of the House of Lords in
Sinclair v Brougham t pointed out that the case turned upon the principle
that it was against public policy to allow the recovery of an ultra vires
deposit, whether the claim be based upon contract or quasi-contract.