Quasi Contracts – Indian Contract Act 1872
The Indian Contract act of 1872 was created with the intention to safeguard the interest of the parties entering into a contract, to issue problems and issues arising out of the contracts, to clearly mention various essentials and conditions to execute a contract, etc.
A quasi contract is a binding obligation that is imposed by the courts to avoid injustice or unjust enrichment. A quasi contract can be described as an implied contract that is to be fulfilled and performed lawfully, and is enforced by courts with an intention to prevent manipulation and injustice. It is a special form of contract where there is no requirement and necessity for mutual assent of the parties involved. The obligation is imposed on the parties without assent by the courts. A situation in which there is an obligation as if there was a contract although the technical requirements of a contract have not been fulfilled. It is also called an implied-in-law contract.
Unjust enrichment happens when Party A presents an advantage upon Party B without Party A receiving the legitimate compensation required by law. This normally happens in a legally binding arrangement when Party A satisfies his/her part in the understanding and Party B doesn’t satisfy his/her part in the understanding. The principle of unjust enrichment requires that a party has been enriched by some benefit, the enrichment is at the expense of the other, the retention of the enrichment is unjust.
Kinds of Quasi-Contract
Supply of necessaries to persons incapable of contracting
This type of quasi contract is mentioned under section 68 of the Indian contracts act. It states that any person or individual supplying necessaries of life to another person or individual who is incompetent or unable to enter into a contract is entitled to payment and compensation of the services or price from the other person’s property.
For instance, if ‘A’ is a doctor who is treating and taking care of his brother ‘B’ of unsound mind is who is unable to enter into a contract or make decisions; the doctor is entitled to his expenses and fees and can recover the same from the property of the patient. Similarly, if money is paid to such person for the purchase of necessaries, reimbursement can be claimed.
In the case of Jai Indra Bahadur Singh v. Dilraj Kaur , a minor was bound to support his sister and money was advanced to him for the same. The money advanced to him was for the purpose of the marriage of his sister. This amount that was advanced was held to be necessities under this section and also recoverable from the property.
The essentials to be considered are that the services or goods must come under or within the category of necessities, the necessities should be supplied only to such persons to whom he/she is legally bound such as wife, husband etc., e he/she is liable to pay only a reasonable price and not the price which he has agreed to pay.
Payment by an interested person
This kind of Quasi contract is mentioned under section 69 of the Indian contract act. It deals with the right to recover money paid for another person An individual who is keen on the giving of cash which another is obliged by law to pay is qualified to be repaid by the other. The expenses of one party are to be paid by another party, when such situations arise, it’s said to be a Quasi contract.
In the case of Hazarilal Vs Navaranglal. The court created and established the existance of a Quasi contract under section 69 of the act . The dues that were to be paid by one party were cleared by another party and therefore the party who paid the amount is entitled to reimbursement.
In another case, Dakshina Mohun Roy v. Saroda Mohun Roy Chowdhry, it was held that money paid by a person while in possession of an estate under the decree of the court for preventing the sale of the estate for recovering the arrears of government revenue may be recovered by him under this section. The conditions of liability under this section are that the plaintiff should be interested in making payment to protect his interest.
The interest should be legally recognizable, the plaintiff himself should not be bound to pay, the defendant should have been bound by law to pay the money, and the plaintiff must have made the payment to another party
Obligation to pay for non-gratuitous acts
This is mentioned under section 70 of the Indian Contract act . When one party conducts an activity and its benefit is attained by another party then the court can create a quasi contract. In the case of Damodar Modaliar Vs Secretary of State for India, the local government .
Responsibility of finder of lost goods
This is mentioned under section 71 of the Indian Contracts Act Court can create a quasi contract in case of the finder of lost goods. In the case of Hallius Vs Fowler, one finds a diamond at a store and asks the store owner to return the diamond to the original owner. True owner is not found. When true owner is not found. Finder gets the title. No one can claim share in it. The court in this scenario creates a bailment contract and provides for the finder of the diamond to get it.
When Money is paid or things delivered by mistake or under coercion
This is mentioned under section 72 of the act. In a scenario where there is any payment made by mistake or an instance where goods are delivered by mistake, the court can enforce a quasi contract that can be binding on the parties to prevent unjust dealing. In the case of Khaniyalal Vs Sales Tax Officer of the Banaras. In this case Mr. A pays Sales tax by mistake which he is not required to pay. Here Court creates a quasi Contract and capacitates A to recover that amount.
Author: Anil George,
Christ University, 2nd year