Quasi Contract

INTRODUCTION

CONTRACT

The term ‘contract’ defines under section 2(h) of  Indian Contract Act , 1872 as “An agreement enforceable by law is a contract”. It creates and defines the duties and obligations of the parties involved.  The promise may be to do something or to refrain from doing something. The making of a contract requires the mutual assent of two or more persons, one of them ordinarily making an offer and another accepting. If one of the parties fails to keep the promise, the other is entitled to legal redress

PROCESS OF CONTRACT

ESSENTIAL ELEMENTS OF CONTRACT

Essential elements of contract are given under section 10 of  ICA 1872.


TYPES OF CONTRACT

QUASI CONTRACT

When we talk about a valid contact we expect it to have certain elements like offer and acceptance, consideration, the capacity to contract, and free will. But there are other types of contracts as well .There are cases where the law implies a promise and imposes obligations on one party while conferring rights to the other even when the basic elements of a contract are not present. These promises are not legal contracts, but the Court recognizes them as relations resembling a contract and enforces them like a contract.
So Quasi Contract  are not a real contract, but are identical to a contract, which is formed out of some circumstances.
 The Indian Contract,1872 has not used the words ‘Quasi Contracts’ rather used ‘certain relations resembling as contracts’ as per Sex 68 of the Act. This indicates that these are not contracts but are deemed to be contracts when the law puts certain obligations.  Sec 68-72 (chapter 5) deals with ‘certain relations resembling those created by contracts’. Quasi contract can be defined  ‘as an obligation enforced by the law on one party to avoid unjust enrichment of that party’. There is no prior agreement,offer and acceptance in a Quasi contract. Quasi contract is enforced when any person enjoys the benefit of something but does not pay for it or the other person might have to bear the burden of it.
For example – A contracts with B to deliver goods to A’s residence.B accidentally delivers it to C who consumes these goods. Though there is no contract between B and C but C have to pay for it because there was Quasi contract between them .

ESSENTIAL OF QUASI CONTRACT

  1. The defendant has taken the benefit or the defendant has been enriched by the receipt of  a benefit.
  2. Benefit (enrichment) is ‘at the expense of plaintiff’.
  3. It is an unjust benefit or retention of the enrichment is unjust.
  • The Indian Contract Act 1872 has mentioned 5 situations which are deemed to be Quasi contracts  under chapter 5 section 68 to 72 under Indian Contract Act 1872 –

SECTION 68
Claim for necessaries supplied to person incapable of contracting, or on his account

If a person, incapable of entering into a 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

In simple term When any necessary goods which are important for one’s survival are supplied to a person who is not capable of contract,then the person who is supplying such goods has the right to recover the amount from such person’s property. For example  A sends goods to B  who is a lunatic and for the welfare of B’s young son and daughter. A  is entitled to receive the money from B’s property.

A contract with minor is void but if the agreement with minor is for necessaries then plaintiff can recover his amount from minor’s property.

CASE-                   Mohari Bibi  v. Dharmodas Ghose [1]

FACTS–  The plaintiff, Dharmodas Ghose, while he was a minor, mortgaged his property in favour of the defendant, Brahmo Dutt, who was a moneylender to secure a loan of Rs. 20,000. The plaintiff brought an action against the defendant stating that he was a minor when the mortgage was executed by him and, therefore, mortgage was void and inoperative and the same should be cancelled. The Defendant, amongst other points, contended that the plaintiff had fraudulently misrepresented his age and therefore no relief should be given to him.

JUDGEMENT – The court held that the plaintiff was a minor at the time of making of the agreement. Hence THE CONTRACT by him I void abinitio and he cannot be made liable even if he misled the defendant.

SECTION 69-
Reimbursement of person paying money due by another, in payment of which he is interested.

  • One person is bound by law to pay but he fail to pay
  • Another person is interested in the payment of money and therefore he pays it
  • The person so making the payment is entitled to be reimbursed by one , who was bound to pay

For example
Peter is a zamindar. He has leased his land to John, a farmer. However, Peter fails to pay the revenue due to the government. After sending notices and not receiving the payment, the government releases an advertisement for sale of the land (which is leased to John.
John does not want to let go of the land since he has worked hard on the land and it has started yielding good produce. In order to prevent the sale, John pays the government the amount due from Peter. In this scenario, Peter is obligated to repay the said amount to John.

SECTION 70
Obligation of person enjoying benefit of non-gratuitous act

Where a person lawfully does anything for another person, not intending to do so gratuitously and other person enjoys the benefit thereof, the latter is bound to make compensation to the former  to restore, the thing so done or delivered
The defendant must enjoy the goods.

For example-  A, a tradesman, leaves goods at B’s house by mistake. B treats the goods as his own. This is a non-gratuitous act so B is bound to pay A for them

But in the case of non –gratuitous act ‘Minor’ is exception i.e. minor will not be liable if he enjoys the benefit of non – gratuitous act.

CASE –                 P.C. Wadhwa  v. State of  Punjab[2]

FACTS –In this case, the plaintiff  got selected in the service of the Forest Department of the punjab State. He was given practical training and education at the Indian Forest College at Dehradun. He was supposed to sign a bond to serve the Department for 5 years after such training and education, or otherwise to refund the cost of the same incurred by the State of Punjab. He was selected in the I.P.S. and he left the Forest College in between, without the sanction of the Punjab Government. The State brought an action to recover a sum of money which was the cost of training and education of the appellant.

Judgement – It was held that Mr. Wadhwa voluntarily enjoyed the benefit of training, the same was not supposed to be gratuitous as is obvious from the type of bond to be executed by each trainee, and the act done by the state was lawful, and hence Section 70 was applicable to the case and the liability of Mr. Wadhwa to pay the compensation had arisen.

SECTION 71
Responsibility of finder of goods

A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee.

Bailee is defined under sec 148 of Indian Contract Act 1872 as ‘a person  to whom the goods is delivered for some purpose’

A bailee is bound to take as much care of the goods as a man of ordinary prudence would, under similar circumstances, take his own goods for the same bulk, quality and value. To avoid the liability of criminal misappropriation of property, the finder must try to find out the real owner of the goods and must not appropriate the property to his own use

Duties of the finder of the goods –
          to take reasonable care.
          try to find out the real owner.

SECTION 72 –
Liability of person to whom money is paid, or thing delivered, by mistake or under coercion-

A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.

For Example-
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.

REMEDIES FOR THE BREACH OF QUASI CONTRACT-

In Indian contract Act 1872 there is such word ‘Quasi Contract’ rather used  ‘certain relations resembling as contracts’. So quasi contract have certain similarity as contract. So the remedies for breach of quasi contract is same as breach of contract . Remedies for breach of contract are given under section 73 of Indian Contract Act 1872 which states that “When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation from the party who has broken the contract for any loss or damage caused to him”

DIFFERENCE BETWEEN CONTRACT AND QUASI CONTRACT

         CONTRACT      QUASI CONTRACT
It is real agreement between 2 or more parties.It is not an agreement but resembles an agreement or a contract
both parties give their consents freely i.e. it is voluntarily madeNo consent as it is not voluntarily made
Define under sec 2(h) of  ICA 1872Define under sec.68 to 72 under ICA 1872

CONCLUSION

Quasi-contracts are based on the principle of Nemo debet locupletari ex aliena jactura, which implies that no man should grow rich out of another person’s loss. Consequently, liability in the case of quasi contractual responsibilities is based on the principle of unjust enrichment . Quasi contract basically means that no individual must get unjustly enriched at the cost of another individual’s loss.

BIBILIOGRAPHY

Various sites  and books were used for the completion of this project report. Here are some of them listed


[1] (1903) ILR 30 Cal 539 (PC)

[2] AIR 1987 P&H 117  0

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