What are the basic elements of quasi-contract?

A quasi-contract refers to the obligation of the contract created out of order by the court not to let one party get unfair benefit out of the situation at the expense of other parties where there is the absence of initial agreement among the parties and there is a dispute between them.

Índice Show

• Examples of Quasi-Contract
• Requirements of Quasi-Contract
• Types of Quasi-Contract
• Difference Between Quasi-Contract and Contract
• Disadvantages
• Recommended Articles
• What are the essentials of a quasi contract?
• What are the kinds of quasi contracts?
• Case laws of quasi contract

A quasi-contract is an agreement imposed by the law, which outlines the obligation of one party towards another party if the former possesses the property of the latter party, i.e., something is acquired by one party at the expense of another party. The court creates these to avoid unjust enrichment of any party’s overpayment against a good or service. Since the court makes these, neither party can disagree with it and must follow it.

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Examples of Quasi-Contract

• A person orders some perishable items online by providing his address and paying for the same. At the time of the delivery of the goods, the delivery man delivers them to the wrong address. Instead of denying the delivery, the receiving party accepts the order and consumes the same.
• The case went to the court, and the court then ordered to issue a quasi-contract according to which the recipient has to pay back the cost of the item to the party who paid for the item initially. So, in this case, the benefits of the goods have been enjoyed by the receiving party, so such a receiving party is bound to compensate the former party.

Features

The features are as follows:

1. Usually, the quasi-contracts provide the right to the money.
2. There is an absence of the contract or mutual consent among the parties; thus, it is imposed by the law and is not the outcome of any agreement.
3. They are based on equity, a good conscience, justice, and principles of natural justice.

Requirements of Quasi-Contract

There are certain types of the requirement that are required for a judge to fulfill for making a ruling for the quasi-contract, as discussed below: –

1. The plaintiff must have provided service or tangible goods to the defendant, and the plaintiff had the impression that he would receive payment for such goods or services.
2. Also, the plaintiff should justify that the defendant would be unjustly enriched if he received goods or services without their payment.

Types of Quasi-Contract

The types are laid down under sections 68 to 72, which are mentioned below: –

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#1 – Section 68

It states that a person is not capable of entering into any contract. Therefore, the supplies are provided to him or anyone the incapable person is legally bound to support by the third party. The supplier third party is entitled to recover such supplier’s price from the unable person’s property.

#2 – Section 69

It states that if a person is interested in paying money and pays on behalf of another person, he is bound to pay by the law. So then, the person who made the payment is entitled to reimbursement by another party (on behalf of whom he has paid).

#3 – Section 70

It states that the receiving party has enjoyed the same benefits if a person does anything for the other person lawfully or delivers something without intending to do the same gratuitously. Then, such a receiving party is bound to compensate the former party.

#4 – Section 71

It states that if a person finds goods that belong to another party and takes such goods into his custody, then the former has responsibility the same as that of a bailee.

#5 – Section 72

It states that if a person has been paid or delivered mistakenly or under coercion, he must repay or return.

Difference Between Quasi-Contract and Contract

The contracts are the expressed ones approved by the parties under consideration as a matter of law where they share interests and consequences though specifically described conditions. In contrast, under quasi-contracts, the obligations are enforced by the law based on the parties’ conduct to prevent the undue advantage of one party over the cost of another party.

Advantages

The advantages are as follows:

• It prevents the undue advantage of one party over the cost of other parties as it is based on the unjust enrichment principle.
• It is created by order of the court, so none of the parties involved can disagree with such orders. So, all the parties involved are obliged to follow it.

Disadvantages

The Disadvantages are as follows:

• The enriched party will not be held liable in the cases where the benefit he received was tendered negligently, unnecessarily, and by the miscount.
• It is generally created only to the extent necessary to prevent unjust enrichment. The plaintiff must forgo all the expected profit he would have earned if there is a whole expressed agreement between the parties involved.

Conclusion

There are situations when there is no contract between the parties. Still, even then, certain social relationships create specific obligations that some parties must perform by order of the court. These obligations are known as quasi-contracts since the same obligations are created as that would have been made in the case of the regular contract. These quasi-contracts are created based on justice, equity, and good conscience principles.

Recommended Articles

This article is a guide to Quasi-Contract and its meaning. Here, we discuss the advantages and disadvantages of types, features, and quasi-contract examples. You may learn more about financing from the following articles: –

Meaning of quasi contract: – The word ‘Quasi’ means pseudo. Therefore, a quasi contract is a pseudo contract. The quasi contract is based on the principle of equity that “a person is not permitted to enrich himself unjustly at the expense of another. This means that no one should accept or receive any benefit unjustly”.

Chapter (V) Section 68-Section 72 of the Indian Contract Act, 1872 talks about “Quasi-Contract“.

In the absence of a contract, but on the principle of equity, the obligation is imposed on the party/individual; such obligation is called quasi contracts/quasi contractual obligation. This is similar to an actual contract between the parties.

The term quasi contract is derived from the Roman law “obligioti quasi x contractu”. A quasi-contract is not an actual contract. It resembles a contract in which the law imposes an obligation on a person to perform an obligation on the land of equity.

When we talk about a valid contact we expect it to have certain elements such as offer and acceptance, consideration, ability to contract, and free will. But there are other types of contracts.

For example: XYZ accidentally leaves his wristwatch at ABC’s house. ABC has a quasi-contractual obligation to return it to XYZ.

Note: – Generally, in a contract, the parties are excluded from an agreement, but in this type of contracts (quasi-contract), obligations are made on the parties without agreement.

What are the essentials of a quasi contract?

The essentials of quasi contract are as follows: –

• It is usually a right to the money and generally (not always) to a corrupted amount of money.
• The right is not a result of an agreement but it is imposed by the law.
• The right does not apply to all in the world but only to a single person. Therefore, it looks like a contractual right.

What are the kinds of quasi contracts?

Section 68 to Section 72 of the Indian Contract Act, 1872 deals with five types of quasi contracts which are as follows: –

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.
   • Illustration: ‘B’ holds land in Bengal on a lease provided by zamindar ‘A’. The revenue owed to the government by A, his land is advertised for sale by the government. Under the revenue law, such a sale would result in the deletion of B’s ​​lease. B to stop the sale and the resulting declaration of his lease pays the government the amount due from A. Here, B can get reimbursed from the property of A.
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, the plaintiff must prove that:
     • What was done or given was legally valid.
     • He did not do so gratefully.
     • Another person took advantage
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.
   • Finder has to adhere to the following responsibilities:
     • Take care of the goods as a person of a prudent man.
     • No right to appropriate the goods.
     • Return the goods to the owner (if found)
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.
   • 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.

Case laws of quasi contract

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. State of West Bengal vs. B.K. Mondal & Sons (AIR 1962 SC 779)

Facts of the case: – The plaintiff did some construction at the request of a state official. The state accepted the work but refused to accept that there was no valid contract.

The Judgment of the case: – Court held in favor of plaintiff. Similarly, in another case, the corporation tried to avoid liability because the contract was not done as per the Bombay Municipal Corporation Act. The corporation was held liable under section 70.