Quasi-contract and its Relation with Contract

Introduction:

A quasi-contract is a contract that is created by the court’s order, not by an agreement between parties to the contract. For example, quasi-contracts are created by the court when no official agreement exists between the parties, in disputes overpayments for goods or services. The objective behind the creation of these contracts is to prevent unjust enrichment to any party. 

Quasi-contracts are based on the principle of Nemo debet locupletari ex aliena jactura, which means that no man should grow rich out of another person’s loss. It is based on principles of equity, justice, and good conscience.

Essentials of Quasi-Contract

1. It is enforceable by law and not formed by contract.
2. It is a right in personam.
3. The individual who incurs expenses is entitled to receive money (unjust enrichment).
4. It is created through a legal fiction.

Kinds of Quasi–Contract

 Sections 68 to 72 of the Indian Contract Act 1872 provides 5 kinds of quasi-contractual obligations, these are as follows:

(A) Supply of necessities [section 68]

(B) Payment by interested persons [section 69]

(C) Liability to pay for non-gratuitous acts [section 70]

(D) Finder of goods [section 71]

(E) A mistake of coercion [section 72]

Case Laws

(A) Supply of Necessaries (Section 68)

Minor’s agreement is void ab initio. Therefore, he cannot be asked to pay for the services rendered or goods supplied to him. However, Section 68 allows reimbursement to the person who supplied necessaries to a minor or lunatic person.  For reimbursement, personal suit cannot lie against the minor, etc. but reimbursement is allowed from the property or estate of the incapable person.

What are Necessaries?

Necessaries doesn’t mean bare necessities of life (i.e., food, cloth, shelter, etc.), but means those things which are necessary to maintain a person according to his conditions in life’ (i.e. his status and requirements). Articles of mere luxury are always excluded, though luxurious articles of utility are in some cases allowed. The infant ought not to have already a sufficient supply of the necessaries.

The following have been held to be necessaries:

1. Supply of racing cycle for an infant apprentice.
2. Debt incurred for performing the funeral rites of the minor’s father.
3. House was given to a minor on rent for living and continuing his studies.
4. A wedding presents for a bride of a minor.
5. Money advanced for defending criminal proceedings.

But where minor is entered into a contract for trading purposes then such a contract would not be considered for necessaries and the same would not be binding on him. It is to be noted that the necessaries may be supplied to someone whom the minor is legally bound to support.

(B) Payment by an Interested Person (Section 69)

A person who is interested in the payment of money and pays it for which the other is bound to pay by law, is entitled to be reimbursed by the other.

For example, where a party had agreed to purchase certain mills, he was allowed to recover from the seller the amount of already overdue municipal taxes paid by him in order to save the property from being sold in execution.

The conditions of liability under Section 69 are:

1. The plaintiff should be interested in making the payment. The person may have or may not have legal proprietary interest in the property in regard to which the payment is made.
2. The plaintiff himself is not be bound to pay. He is interested in making the payment in order to protect his own interest.
3. The defendant is under legal compulsion to pay.
4. The plaintiff must make the payment to another person.

(C) Liability to Pay for Non-Gratuitous Act

Three conditions must be satisfied for invoking section 70.

1. A person should lawfully do something for another person or deliver something to him.
2. 2. The person must not intend to act gratuitously while doing or delivering the said thing.
3. 3. The other person must enjoy the benefit for whom something is done or to whom something is delivered.

Illustrations

• A, a tradesman, leaves goods at B’s house by mistake. B treats goods as his own. He is bound to pay A for them.
• A save B’s property from fire. A is not entitled to compensation from B if the circumstances prove that he intended to act gratuitously.

(D) Finder of Goods

A person, who finds goods belonging to another and takes them into his custody, is subject to the same responsibility as that of bailee (Section 71).

(E) Mistake or Coercion

A person to whom money is paid, or anything delivered, by mistake or under coercion, must repay or return it (Section 72).

Illustration

• A and B jointly owe Rs. 100 to C. A alone pays the amount to C, and B, not knowing this fact, pays Rs. 100 over again to C. C is bound to repay the amount to B.

Similarities between Quasi Contracts and Contracts

The result of the contract and quasi-contract is similar to that of contracts. In case of the claim for damages are concerned both of them are very similar to that of contracts because quasi-contract under section 73 of the Indian Contract Act, 1872 provides remedies for the infringement of quasi-contracts as given for the breach of express contracts in sections of the Indian Contract Act, 1872. Remedies are also offered under the quasi-contract in the Indian contract Act, 1872.

Conclusion

Quasi-contracts are based on the principle of Nemo debet locupletari ex aliena jactura, which means that no man should grow rich out of another person’s loss. Therefore, liability in the case of quasi-contractual obligations is based on the principle of unjust enrichment. Quasi-contract primarily means that no individual must get unjustly enriched at the cost of another individual’s loss. That implies no individual must gain anything unjustly when his gaining such a thing might mean a loss for another individual.