Quasi Contract meaning and definition
The term ‘Quasi’ is a Latin word, which means “as if” or “similarly”. It means seemingly, apparently, but not really. The expression Quasi Contract is derived from the Roman law “Obligatio quasi ex contractu” Quasi Contract is not a real contract entered into by parties intentionally. It resembles a contact, in which law imposes an obligation on a person to perform an obligation on the ground of equity.
A quasi-contract is based on the principle of equity that “A person shall not be allowed to enrich himself unjustly at the expense of another”. In other words, a person should not receive or accept any benefit unjustly. If so, he has an obligation to give it back to the right owner. Such an obligation is called a quasi-contractual obligation.
Example- A leaves his handbags at ‘B’s house by mistake, ‘B’ has a quasi-contractual obligation to return it to ’A’.
As stated above, an obligation is not created in quasi-contract by entering into an agreement. The law creates such an obligation on the ground of natural justice. It is to be noted that, in a contract, an obligation is created on the parties out of an agreement, whereas in a quasi-contract, an obligation is created on the parties without any agreement.
Doctor Jenks define a quasi-contract is a situation in which law imposes on one person on the ground of natural justice, and obligation similar to that, which arises from a true contract although no contract, express or implied has in fact been entered into by them.
Salmond defines Quasi-contract as “there are certain obligations which are not in truth contractual in the sense of resting on an agreement, but which the law treats as if they were.
Lord Mansfield explained such obligation on the principle that law, as well as justice, should try to prevent ‘Unjust Enrichment’ i.e. enrichment of one person at the cost of another.
Anson, in his Law of Contract, started that quasi-contract is not happy term and pointed out the following distinctive features of the quasi-contract
(A) Right to a sum of money
(B) Imposed by law and does not arise by agreement of parties.
(C) Right available only against a particular person or persons.
Right to a sum of money.
“Such a right is always a right to the money, and generally, though not always to the liquidated sum of money”.
Imposed by law and does not arise by agreement of parties
“It does not arise from any agreement of the parties concerned, but is imposed by law so that in this respect the quasi-contract resembles a tort”.
Right available only against a particular person or persons
“It is a right which is available not, like the rights protected by the law of tort, against the entire world, but against a particular person, persons only, so that in this respect, it resemble a contractual right”.
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Kind of Quasi Contract
Section 68 to 72 of the Indian Contract Act, 1872, deals with five kinds of quasi-contract as follows-
(1) Supply of necessaries to a person not competent to contract (minor) (section 68)
(2) Payment by an interested person (Section 69)
(3) Non Gratuitous Act (Section 70)
(4) Responsibility of finder of lost goods (Section 71)
(5) Payment by mistake or Coercion (section 72)
Supply of necessaries to a person not competent to contract (minor) (section 68)
Section 68 deals with the claim of necessaries supplied to a person incompetent of contracting, or on his account. It runs as follow-
If a person, incapable of entering into a contract, or anyone whom he is a legally bound to supply, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplied is entitled to be reimbursed from the property of such incapable person.
A supplied B, a lunatic, with necessaries suitable to his conditions in Life. A is entitled to be reimbursed from B’s property.
A supplied the wife and children of B, a lunatic, with necessaries suitable to their condition in life. A is entitled to be reimbursed from B’s property.
To constitute Section 68 the following essential elements are to be satisfied.
(A) If a person supplies necessaries to a person who is incapable of contacting or to anyone who he is legally bound to support.
(B) The necessaries must be suitable to his condition in life.
(C) The person supplying the necessaries is entitled to be reimbursed.
(D) The liability of such person incapable of contact is limited to his property or in other words he incurs no personal liability for the obvious reason that he is incompetent to contract.
Relevant case law
Kunwar Lal vs. Surajmal, AIR 1963,
In this case, the house given to a minor on rent for living and study was held to be the supply of necessaries and was recoverable.
Chapple vs. Copper, AIR 1844,
It was held that an infant (minor) widow is bound by a contract for the burial of her husband as the contract is for a necessary.
Reimbursement of money paid, due by another (payment by an interested person Section 69)
If a person makes any payment out of common interest which another ought to pay. It such case, the person on whose behalf the payment had been made has quasi-contractual obligation to repay the same.
If a tenant pays house tax to stop the eviction, he can recover the amount from the owner. In other words, the house owner has a quasi-contractual obligation to repay the amount to the tenant.
Section 69 of the Indian Contract Act, 1872, deals with reimbursement of a person paying money due by another, in payment of which he is interested. A person who is interested in the payment of money which another is bound by law to pay, and who therefore pays it, is entitled to be reimbursed by the other.
B holds land in Bengal, on a lease granted by A, the zamindar. The revenue payable by A to the government being arrears, his land is advertised for sale by the government. Under the revenue law, the consequences of such sale will be the annulment of B’s lease. B, to prevent the sale and the consequent annulment of his own lease, pays to the government the sum due from A. A is bound to make good to B the amount so paid.
This Section lays down that where one person is bound by the law to pay money and another being ‘interested in the payment’. Actually makes the payment, the law imposes an obligation on the farmer to reimburse the letter.
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Non Gratuitous Act (Section 70)
Section 70 of the Indian Contract Act, 1872, deals with the obligation of a person enjoying benefits of the non-gratuitous act. The term ‘gratuitous’ “means done or given for nothing”. Non-gratuitous act means “an act or service done with the expectation of something in return”.
Responsibility of Finder of lost goods (section 71)
Section 71 of the IPC Act, contemplates another quasi-contractual situation. When a person finds some goods belonging to another, obligation to return them to the true owner. He is subject to the same responsibility as a bailee.
Section 71 deals with the responsibility of the 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.
Once a finder of goods belonging to another takes the goods into his custody, he is treated under the law as a bailee and section 71 of the Act imposes upon him the same responsibility as of a bailee. Section 71 provides that the responsibility of a finder of goods is the same as a bailee. The duties of a bailee, as provided under the different section of the Contract Act, are as follows-
(1) Duty to make a reasonable care of goods
(2) Duty to return goods.
(3) To make proper use of the goods bailed
(4) Duty on not to mix his own goods with the goods of the bailor.
(5) Duty not to question the title of the bailor and
(6) Duty of bailee to pay increase or profit from goods bailed.
Finders right to sell
Under section 169, the founder of the goods has the power to sell them when-
The owner of the goods cannot with reasonable diligence be found, or if he refuses, upon demand, to pay the lawful charges of the founder and
Either the things found are in danger of perishing or of losing the greater part of its value or in case of goods are not of perishable nature, but the lawful charge of the finder, in respect of the thing found, among to two-third of its value.
If the situation is not covered by section 169 and the finder sells the goods, he can be made liable for conversion.
Finder’s Right of Lien and Compensation
The finder of the goods has no right to sue the owner for compensation for the trouble and expense voluntarily incurred by him to preserve the goods and to find out the owner, but he may retain the goods against the owner until he receives much compensation, and where the owner has offered a specific award for the return of the goods lost, the finder may sue for such a reword and may it retain the goods until he received it.
Even if no specific reward has been offered, but if after the goods are found, the owner promises to play something to the finder for his service. the finder can enforce this promise under section 25(2 )
Example– A finds B’s purse and give it to him, B promises to pay A’s expenses in so doing. It is a valid contract and a can recover the amount from B.