Introduction
Quasi-contract is a legal concept that applies in situations where there is no formal agreement between parties, but where one party has received a benefit from another party, and it would be unjust for the benefiting party to retain that benefit without compensating the other party. It is sometimes referred to as an implied-in-law contract because it is not a true contract in the sense that it is not based on a mutual agreement between the parties.
Quasi-contracts are not based on the intentions of the parties involved, but rather on a sense of fairness and equity. They are often used to prevent one party from unjustly enriching themselves at the expense of another party. For example, if a contractor accidentally overpays a subcontractor, the subcontractor may be required to return the overpayment under a quasi-contract theory.
One important feature of quasi-contracts is that they are not based on a promise or agreement between the parties. Instead, they are imposed by the court as a matter of law to prevent unjust enrichment. In other words, the court will use a quasi-contract theory to create an obligation to pay where no such obligation existed before.
Quasi-contracts can arise in a variety of situations. For example, if a person pays for a service that was not requested, the recipient of the payment may be required to pay it back under a quasi-contract theory. Similarly, if a person performs work for another person without a formal contract, they may be able to recover compensation under a quasi-contract theory if the other person benefits from the work. Chapter V of the Indian Contract Act deals with such situations.
Essentials
- There must be an unjust enrichment/benefit to the defendant party.
- The enrichment/benefit which the defendant gets is at the expense of the plaintiff.
- The retention of enrichment is unjust.
Indian contract act deals with the following quasi-contractual obligation
- Claim for necessaries supplied to a person incompetent to contract (section 68)
- Reimbursement of money paid, due by another (section 69)
- Obligation of persons enjoying (section70)
- Responsibility of finders of goods(section71)
- Liability of a person getting benefit under mistake or coercion (section 72)
A significant decision in the English legal history of quasi-contracts is Moses v. Macferlan. In 1760, the Court of King’s Bench rendered a decision in the case.
The following is the case’s relevant facts: Moses had hired Macferlan, a stockbroker, to sell some shares on his behalf. Moses’ share of the earnings was not given to him by Macfarlane, who had sold the shares and pocketed the cash. Macfarlane claimed that because Moses had not given him his commission, he was entitled to keep the profits. Moses filed a lawsuit against Macferlan to collect the profits, saying that Macferlan had gotten rich at his expense through unfair means. Moses prevailed in court, and it was determined that Macferlan was required to give him the proceeds.
Lord Mansfield, who presided over the case, observed that a person who receives a benefit unjustly should make restitution to the person who suffered the loss. He stated that the law implies a promise to pay for a benefit received, and this promise forms the basis of a quasi-contract.
The Moses v. Macferlan ruling by Lord Mansfield was a significant advancement in the law of quasi-contracts. It established the rule that anyone who benefits at the expense of another person without a valid reason is required to pay the other person back.
Over the years, various rulings have recognized the Moses v. Macferlan case as a crucial precedent in the law of quasi-contracts. It is regarded as a classic illustration of the law of quasi-contracts’ application of the principle of unfair enrichment.[1]
Section 68 Claim for necessaries supplied to person incapable of contracting or on his account.
When one person supplies necessaries suited to the condition in life of a person, who is incompetent to contract. The person who is incompetent to contract, The person furnishing such supplies is entitled to reimbursement from the property of such incompetent.
Illustration
a) A provides B, a madman, with necessities according to his state of being. A is entitled to compensation from B’s assets.
b) A provide the wife and kids of B, a lunatic, with necessities according to their circumstances. A is entitled to compensation from B’s assets.
Section 69. Reimbursement of person paying money due to another, in payment of which he is interested.
A person who pays money that another is required by law to pay has an interest in doing so and is therefore entitled to reimbursement from others.
There are two necessities, according to this section.
- One individual pays money because he is interested in receiving it.
- Someone else who is required to pay by law does not.
The person so making the payment is entitled to reimburse it from the one who is bound to pay. The purpose of making the payment should be Bonafide. Protection of his interest. By the plaintiff. In English law, it is more narrow and states the payment must be compelled by law to pay the debt or discharge the liability of the plaintiff in making the payment.
In the case of Brooks wharf V Goodman brothers
Brooks Wharf and Bull Wharf Ltd owned two adjacent wharfs on the Thames. Goodman Brothers owned a barge that became stuck on the riverbed between the two wharfs. Brooks Wharf and Bull Wharf Ltd agreed to aid the barge and charged Goodman Brothers for the service.
Goodman Brothers refused to pay, claiming that they had not requested the salvage service and that there was no contract in place. Brooks Wharf and Bull Wharf Ltd argued that Goodman Brothers had been unjustly enriched at their expense and claimed payment based on a quasi-contract.[2]
The House of Lords held that a quasi-contract had arisen in the case. Lord Reid, who delivered the leading judgment, stated that a person who has benefited from the actions of another without having entered into a contract with that person is liable to make restitution for the value of the benefit received. He further held that a quasi-contract arises when there is no actual contract in place, but the law implies a promise to pay for a benefit received.
Applying this principle to the case, the House of Lords held that Goodman Brothers had received a benefit from the salvage service provided by Brooks Wharf and Bull Wharf Ltd and that a quasi-contract had arisen. Goodman Brothers were therefore liable to pay for the value of the benefit received.
In Exalt V partridge
The plaintiff placed his carriage on the defendant’s premises. Since it was lying on the defendant’s premises, the defendant’s landlord seized it as distress because the defendant was in arrears of rent. Plaintiff had to clear his arrears of rent which were otherwise to be paid by the defendant and got his carriage back it was held that the plaintiff was entitled to recover from the defendant the rent so paid by him.
Section 70 Obligation of person enjoying the benefit of the non-gratuitous act.
A person lawfully does anything for the person or delivers anything to him not intending to do so gratuitously and such person enjoys, the benefit there of the latter is bound to make compensation to the former in respect of or to restore, the thing so done or delivered.
Conditions
- A person should lawfully do something for another person or should deliver something to him.
- The person making the payment or delivering the thing must not do so gratuitously he should expect payment for the same.
- The other person should enjoy the benefits of this payment or the delivery of the thing.[3]
- doing something or delivering anything to another person.
When a person delivers something for another person or delivers anything to him not intending to do so gratuitously, he is entitled to claim compensation for the same from another person.
For example,
If A tradesman leaves goods at Bs house by mistake and B treats the goods as his own, B is bound to pay A for them.
INDU MEHTA V STATE OF UTTAR PRADESH
Indu Mehta an advocate, practicing at the district court, was appointed as an assistant government council where she rendered her part of service and later found out to be void under section 24 CPC 1973. It was held even though the appointment was void, the government was not allowed to recover back the fees paid to her.
DAMODAR MUDAILAR V SECRETARY OF STATE FOR INDIA
The government repaired certain tanks which are used to irrigate the land of agriculture of the zamindars (defendant) government did not take the said act graciously. Later the zamindars enjoyed the benefit and were also known certain repairs are taking place. It was held that the plaintiff was entitled to recover part of the cost of repairing from the defendant.
B. It must be doing something positive.
Kirorila V state of MP
The lease was executed by the mining engineer of the State of Rajasthan for the extraction of sand from a certain area in favor of the plaintiff. The officer not being competent to execute the lease. The same was not valid for the construction of a joint project between Madhya Pradesh and Rajasthan. The government of Rajasthan needed a huge quantity of sand. Plaintiff bought an action against the state of Madhya Pradesh to switch over the compensation. As the court the unjust benefit it was holding her that the plaintiff claim is not entitled under Section 70 as there were several positive works done by him that could confer any benefit to the defendant.
C. No intention to do the act graciously.
P mudialar V neevathi ammal
Different. Add 3 sisters. Plaintiff being the husband of one of them, the defendant says to print have to take over the management of the East state and to carry on the proceeding sung before the arbitrators. After working for 5 years, asked for remuneration for the services performed by him. He was spread through promissory note 15,000. He was found by the remuneration because the paying struck for such a long time and also similar services was an arrangement on in 2 pay remuneration after the maternal uncle of the defendants, the plaintiff had no had not done the following graciously.
D. Unjust benefit to the defendant necessary.
CI Abraham V KA cheriyan
A Bought a property for B. Who is residing abroad used to collect the venture on behalf of B to be deposited in B’s account but made a delay in the deposit of the ring A claimed remuneration from B for his service in form of purchasing property for B and collecting rent on the the the the his behalf. Air under the services egregiously and the amount collected was enjoyed by him until the same was deposited. It was not entered. Allowed to claim remuneration under section 70.
Section 71 Responsibility of finders of goods.
Section 71 contemplates still another quasi-contractual situation. When a person is a Finder of goods, it means a person finds a good job belonging to another attack of goods into the custody. The position of the poor finders, of course, is similar to that of a baby. The Finder is bound now to take as much care of the goods as the ordinary prudent person would. Under similar circumstances take off his goods. His bound to return the goods to the true owner if, after a reasonable search, he could have found him. And if there is any damage, slash, or loss to the goods he must compensate for the same.
Finder has no right to sue the owner for compensation for the trouble voluntarily incurred by him to preserve the good and to find out the owner, but could retain the goods until by compensation or where the owner offered reward and letter refusing the same then could be sued for the same. Under Section 25 Clause 2.
Section 72. Liability of a person getting benefit under mistake or coercion.
1672 covers a situation where money has been paid or anything delivered by one person to another, either by mistake or under commercial. According to the section, a person for whom money has been paid or anything tell about by mistake or under coercion must repay or return it. Money paid or anything delivered under mistake according to Article 265 of the Constitution of No Tashan delivered or collected except by the authority of law.
S Kotra basappa versus the Indian bank. Looks like the plaintiff bank received a bit of telegraphic transfer advice and the confirmation telegram from one of its prime systems for crediting the defendant’s account with the sum of ₹1,00,000. The bank or by mistake credited the account twice. The difference with the money. Each time it was held, that dependent utilized the additional sum of ₹1,00,000. Wrongly, he was therefore bound by the law to return the same.[4]
Conclusion
To sum up, we can state that despite the fact that there are many different kinds of contracts—and despite the fact that some people would argue that a quasi-contract qualifies—it is not one because of the many disparities mentioned in the aforementioned article.
Since a quasi-contract is not a contract in the traditional sense, it is also known as a “inverted contract.” Because of this, the phrase “quasi-contract” is not used in a meaningful manner. The simplest rule it adheres to is that a quasi-contract is a straightforward agreement that does not and cannot trump the need for fairness.
Author – Kashif Hamzah
Law Student at Jamia Islamia
[1] Sneha Mahawar, All about quasi-contracts and its types – iPleaders, iPleaders (2022), https://blog.ipleaders.in/all-about-quasi-contracts-and-types/ (last visited Mar 25, 2023).
[2] Avtar Singh’s , contract &specific relief, EBC, 2022
[3] Quasi Contract, Investopedia (2023), https://www.investopedia.com/terms/q/quasi-contract.asp#:~:text=Investopedia%20%2F%20Mira%20Norian-,What%20Is%20a%20Quasi%20Contract%3F,party%20to%20compensate%20the%20other. (last visited Mar 25, 2023).
[4] Avtar Singh’s, contract &specific relief, EBC, 2022