A quasi-contract has no affinity with a contract but rests on the equitable principle that a person shall not be allowed to enrich himself at the expense of another”. Explain by giving suitable illustrations.

Question: “A quasi-contract has no affinity with a contract but rests on the equitable principle that a person shall not be allowed to enrich himself at the expense of another”. Explain by giving suitable illustrations. [HJS 2009]

Find the answer to the mains question only on Legal Bites. [“A quasi-contract has no affinity with a contract but rests on the equitable principle that a person shall not be allowed to enrich himself at the expense of another”. Explain by giving suitable illustrations.]

Answer

The term “Quasi-Contracts” means pseudo contracts, these contracts dint follow the technical format of regular contracts, but because these are based on social responsibility, these are regarded as quasi-contracts. These are the contracts where the law imposes obligations on one party and right on the other even if all the requirements of the contracts haven’t been fulfilled.

The concept behind this is the Latin maxim, “Nemo Debet Locupletari Ex Aliena Jactura” which essentially means that no one should get undue benefit/enriched of another person’s loss.

The easiest way of understanding the concept is to analyze the most common example where 2 people “A” & “B”. “A” delivers a basket of sweets to “B” which was meant for “C”. Now “B” has consumed the entire basket of sweets thinking it was for him. Later when “A” informs “B” that it was for “C”, then “B” just can’t say sorry for the misunderstanding.

He has to pay “A” for the undue benefit which “B” has received in the form of sweets, or else “A” would be at loss. So though there isn’t any contractual relationship between “A” & “B” still “B” owns “A” the number of sweets he has consumed or else “A” can file suit in the court.

The feature of quasi-contract which helps it to distinguish itself from the normal form of contracts is as follows

1. The right of the person who is at loss is not against the right in rem, but it’s the right in personam.
2. The right to arise within the parties is not the result of an agreement, but these rights are imposed by law.
3. This right is usually connected with the liquidated sum of money.

There are two theories that justify the existence of these types of contracts

Theory of unjust enrichment

The existence of this was justified by Lord Mansfield in the case of Moses v. Macferlan [(1760) 2 Burr 1005], where he said that the main aim of law & justice is to prevent “unjust enrichment” that is an enrichment of one person at the cost of another. That means no person should gain anything unjustly, when his gaining such a thing may mean a loss for another person.

He further stated in that case, ‘In one word, the gist of this kind of action is that dependant upon the circumstances of the case is obliged by the ties of the natural justice and equity to refund the money.’

Theory of implied-in-fact contract

This theory states that the juridical basis of quasi-contract was the implied, notional, or fictional contract. Where the circumstances of a case do not lead to an inference of this kind, or where such an inference would be against the law no liability would arise.

This principle was used in the case of Sinclair v. Brougham [1914 AC 392 (HL)], where Lord Summer has stated that an action for money had received rests not on the contractual bargain between the parties but ‘upon a notional or imputed promise to repay.

Lord Parker stated that if a promise to pay back an ultra vires loan could be imputed to the company as quasi-contractual obligations the result would validate transactions that have been declared void on the ground of public policy and the law would be enforcing a notional contract where an express contract would have been void.

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Law of Contract Mains Questions Series: Important Questions for Judiciary, APO & University Exams

1. Law of Contract Mains Questions Series Part-I
2. Law of Contract Mains Questions Series Part-II
3. Law of Contract Mains Questions Series Part-III
4. Law of Contract Mains Questions Series Part-IV
5. Law of Contract Mains Questions Series Part-V
6. Law of Contract Mains Questions Series Part-VI
7. Law of Contract Mains Questions Series Part-VII
8. Law of Contract Mains Questions Series Part-VIII
9. Law of Contract Mains Questions Series Part-IX
10. Law of Contract Mains Questions Series Part-X