Quasi Contract Under Indian Law

Quasi means 'almost', 'apparently but not really,' or 'as if'. The obligation between the parties is not contractual, but it is considered as such by the law. Courts create quasi-contracts to protect the parties in a dispute over the payment of goods or services from unjust enrichment.

Meaning of Quasi-Contract

A quasi-contract is a contract made by law to ensure justice that does not require any expression of assent. The quasi-contractual obligations are based on the idea that law and justice should try to prevent unjust enrichment, which means enrichment of one person at the cost of another, or to prevent a man from retaining money or benefits derived from another that he should not have.

In other words, a quasi-contract is something with quasi-ability or something that looks to be something but is not. A contract is a potential oral or written agreement that may be enforceable by law. A quasi-contract is a retroactive connection between two events with no prior obligations to each other. In the absence of any agreement between the parties, it is a contract created by a court order.

In the Indian context, Sections 68 to 72 of the Indian Contract Act 1872 deal with "certain relations resembling those created by contract.".

Essential Features of Quasi-Contractual Rights

Following are the essential features of quasi-contractual rights −

• A "quasi-contract" is not more than an actual contract.

• It no longer follows the offer and acceptance rule.

• It is imposed by law instead of by any formal agreement.

• It is a right that can be exercised not against the entire world but against a specific man or woman.

• It is based on the ideas of equity, appropriate conscience, justice, and herbal justice.

Doctrine of Quasi-Contracts

Unjust enrichment means that an individual cannot enrich himself at the expense of unknown parties. Quantum meruit, or "the actual value of services operated," determines the amount to be paid for services where no contract exists or when the amount required for the work carried is uncertain but achieved under instances where charges should be expected.

Types of Quasi-Contract

Sections 68 to 72 deal with five types of quasi-contractual obligations.

Supply of Necessities to Incapable Persons (Section 68)

If a man or woman is incapable of entering into a contract, or if all people whom he is legally bound to support are supplied with necessaries applicable to his condition in life by any other person, the man or woman who has furnished such resources is entitled to be reimbursed from the property of such an incapable person.

Chappell v. Cooper

Things that are necessary are those that a person cannot reasonably exist without, such as food, shelter, and clothing. Development of the mind is as important as cultivation of the body, and so support for the growth of the body, education and instruction in art and trade, and so on, may be necessary. As a result, what comprises necessity is a relative thing. So far, two conditions must be met −

• Contracts must be for goods that are reasonably necessary for his support.

• He must not have a sufficient supply of these needs.

Payment by Way of a Fascinated Character (Section 69)

According to Section 69, an individual who is prepared to pay a monetary fee that someone else is bound to pay and who may pay it as a result is entitled to compensation from the other.

In Govindram Gordhandas Seksaria v. State of Gondal case, the party agreed to purchase some mills, and he was allowed to recover from the seller the sum of previously overdue municipal taxes paid by him in order to save the property from being auctioned. Furthermore, the court explained that section 69 does not require that a person interested in a payment have a legal proprietary interest in the property in respect of which the payment is made.

Obligation to Pay Gratuitous Non-Acts (Section 70)

Section 70 says that if a person lawfully does or gives you something for the other without intending to do so gratuitously and the person earns any profit from it, he is responsible for compensating or restoring the factor so done or delivered.

Responsibility of Finder of Goods (Section 71)

According to Section 71, a man who finds the goods of some other person and takes them into his custody is subject to the same liability since the bailee is bound to take as much care of the goods as a man of everyday normal prudence would.

Furthermore, he should make efforts to trace the owner. Otherwise, he will be held responsible for one-sided conversations. The property will vest with the finder until the proprietor is found; he can sell if the items are perishable, the proprietor cannot be traced, the proprietor refuses to pay the legal fees, and so on.

Payment of Delivery via Mistake or Coercion (section 72)

"Liability of those to whom cash or goods are delivered by mistake or coercion." It is the ability of the individual to whom money is paid or goods are delivered by mistake or under coercion to repay the money or return the goods to the proper owner.

According to Mafatlal Industries v. UOI, when excise or customs duty is levied due to misapplication or mistake of law and the assessor passes on the tax burden to third parties, no suit for refund on the ground of a legal mistake is maintainable. Assessees cannot claim a refund in such situations because it would amount to unjust enrichment.

Conclusion

The obligations imposed by quasi-contracts are not the same as those imposed by actual contracts. In the same way that several sections of the Indian Contract Act give remedies for breach of express contracts, Section 73 of the Indian Contract Act provides remedies for breach of quasi-contracts. It states that the remedy for breach of express contracts is that any person who is injured is entitled to the same compensation as if the party in default had contracted to discharge it and had broken his contract.

The parties have not agreed to any terms and conditions in writing. The law imposes such obligations on the parties who receive the undue benefit to compensate the other parties based on equity, natural justice, and good conscience. The doctrine of quasi-contracts is a key component of the 1872 Indian Contract Act, which gives relief to parties who have suffered losses while someone else has benefited.

Frequently Asked Questions (FAQs)

Q1. Is a "quasi-contract a contract?

Ans. Because a quasi-contract is not a true contract, mutual assent is not required, and a court may impose an obligation regardless of the parties' intent. When a party sues for damages under a quasi-contract, the remedy is usually restitution or recovery under the quantum meruit theory.

Q2. What are those relations that resemble contractual relations?

Ans. Quasi-contracts are those relationships that have the appearance of a valid contract (Chapter V of the Indian Contract Act, 1872). The requirements require a person to compensate another for an act even if no contract has been entered into or there is no tortious liability.

Q3. What is a "quasi-contract as per the Indian Contract Act?

Ans. Some relationships "resembling those created by contract" are referred to as quasi-contracts. The Indian Contract Act of 1872 covers it in Chapter V (Sections 68–72). In this case, an individual is obliged to compensate another even when there is no agreement between the parties.