What are quasi-contracts? What type of quasi-contracts has been recognized by the Indian Contract Act?

Question: What are quasi-contracts? What type of quasi-contracts has been recognized by the Indian Contract Act? [JJS 2017]

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Answer

A quasi-contract deals with the rights or responsibilities resulting from agreements identical to those established by the contract. It is not a real contract and is therefore pointed to as a non-consensual contract dependent on a party’s consent.

The quasi-contract is based on the concept of equality and justice and forbids one person from being enriched at the detriment of another, i.e., a contract where either party has no intention of making a bond, but the statute enforces the contract. The contract provided for in the statute is simply a remedy given by the court to impose equal or moral duties, despite the absence of the party’s consent to be charged.

The application of the Quantum Meruit doctrine, which is what one has earned or deserved on implicit assumpsit, makes a quasi-contract viable.

English Law defined quasi-contractual obligations first. The framers of the Indian Contract Act altered it and inserted it in the Act as “certain relations resembling those created by contracts”. The elements that are present in the quasi-contract in English Law are therefore also contained in that of the Indian Contract Act.

While the Indian Contract Act of 1872 does not describe a quasi-contract, it terms it as a contract-like partnership. A quasi-contract can, however, be characterized as a transaction in which there is no contract between the parties; certain rights and obligations between the parties are created by law that is similar to those created by the contract.”

These are not contracts, but rather fictitious agreements emerge to guarantee fairness, that if an individual gains an undue gain at the expense of another, it will be unjust. On the grounds of the theory of unjust enrichment, accountability resides in quasi-contracts.

Take an example of an individual in whose house some goods were left incidentally so that individual is obliged to recover them. There would be a duty on the owner of the house to securely recover the goods levied by statute irrespective of any arrangement between the parties. These types of contractual commitments are referred to as quasi-contractual obligations.

The theory of equality and justice is the foundation of Quasi-contracts. It clearly states that no one at the detriment of another can unjustly enrich himself. It is a duty which the statute imposes in the absence of any arrangement when in certain conditions, the actions of the party or of others put in the hands of one person, money or its equal, that he shall not keep it in equity and good faith, and which belongs to another injustice and right. He is then put under a responsibility to reinstate or compensate for such a benefit

Types of Quasi-Contracts

1. Claim for Necessaries Supplied to a Person Incompetent to Contract [SECTION 68]

If a person is a minor or is of unsound mind or ineligible by any statute under which he is subject, a person is incapable of contracting. It cannot be claimed a married or single woman is incompetent to contract purely on the grounds of sex or coverture. For an individual, the necessaries are a subjective concept to the state of life of a person he lives in. The word ‘necessaries’ indicates the immediate needs of the individual incompetent to contract and is not restricted to his preliminary specifications.

2. Reimbursement for Payment of Money by a Person Interested in its Payment [Section 69]

In English law, if the money is paid for the use of the defendant, the claimant will be compensated. Payment can be paid for the use of the defendant in three ways Chappel v. Cooper [13 LJ 286].

1. Discharge of a legal obligation.
2. Discharge of the defendant’s responsibility under compulsion against a third party.
3. Payment to a third party at the behest of a claimant.
4. Responsibility of a Person Relishing Benefits of Another Person’s Non-gratuitous Act [Section 70]

If ‘A’, lawfully, does something for ‘B’ not planning to do so voluntarily and ‘B’ receives a profit because of this act of ‘A’, then ‘B’ is obliged to pay ‘A’ for the items done or delivered, or to recover them. This was embodied in a clause of The Indian Contract Act,1872. A tank provided water for irrigation to eleven villages in Damodar Mudaliar v. Secretary of State for India [18 Mad 88 (1894)].

Some of the villages were zamindari villages, and the government was responsible for others. Some changes were made by the government in order to protect the tank. The government did not wish to do so free of charge and the zamindars loved the advantages of it. They were held accountable to contribute to the government’s expenditures

3. Responsibility of the Finder of Goods [Section 71]

According to Section 71 of the Indian Contract Act 1872, liability for the finder of goods is the same as that of a bailee. The rights of the finder of goods are not clarified in Section 70, however. Under Sections 168 and 169, his rights are clearly clarified.

Liability of an individual to whom money is charged or whatever is given by mistake or coercion, whether money has been paid or whatever has been delivered by mistake or coercion to a person, he is liable to refund or return it under Section 72.

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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