What is Quasi Contract: Meaning, Essentials with Examples
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What is Quasi Contract: Meaning, Essentials with Examples

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What is Quasi Contract meaning? In the Law of Contracts, there are some obligations that are provided that do not contract because they fail to cover all the essential elements of a contract, but still, these contracts are enforceable in the courts. For your question what are quasi contracts? Such contracts are called Quasi Contracts in the Law of Contracts.

Features of quasi-contracts have been provided under Chapter V and deal with sections 68 to 72 of the Indian Contract Act. So let’s discuss this in detail.

Meaning of Quasi Contract

Quasi contracts meaning can be found under the Contract Act, quasi contracts are the contracts that are formed from the order of the courts in absence of any agreement between the contracting parties. As we discussed, these types of quasi contract with examples do not full the conditions given under section 10 of the Contract Act. But these types of contracts are still valid in the eye of the law.

Generally, quasi-contract meaning is defined as “Certain relations resembling those created by contracts.”

Further, it is defined as “An obligation enforced by the law on one party to avoid unjust enrichment of that party.”

Definition of Quasi-Contract is nowhere provided in the Indian Contract Act, but there are some features of quasi-contract in the Indian Contract Act, defined under sections 68 to 72.

Examples of Quasi-Contract: A promised B to deliver goods to B’s house. But, mistakenly, A delivers goods to C’s house who is a neighbour of B. C consumes these goods and later refuses to pay for them. But, in the court, it was held that C is liable to pay B the amount for goods that he consumed.

The quasi-contract is a term that evolved in England. And in India we do not use the word quasi-contracts rather we use ‘certain relations resembling those created by contracts.’

The Principle of Unjust Enrichment

The Latin maxim, Nemo debet locupletari ex aliena jactura, means "No man can earn money from the loss of another person." Therefore, the obligations of the quasi-contract are based upon the principle of unjust enrichment.

The simple meaning of this principle and maxim is no man should get unjustly enriched at the cost of any other person's loss.

Features of Quasi Contract (Types of Quasi Contract)

There are 5 features/types of quasi-contracts provided under sections 68 to 72 of the Indian Contract Act, 1872. Let’s discuss them.

1. Necessaries Supplies to a Person Who is Incapable of Contracting. (Sec. 68)

Section 68 states that "If a person, incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person."

It means, if an individual who is incapable of entering into a contract (i.e. minor, intoxicated person, unsound mind person etc. This is provided under section 12) or of the dependants of that individual are taken care of by someone, then he has right to reimburse the property from such incompetent persons.

The word "Necessaries" has not been defined under this Act. The general meaning of "Necessaries" means, necessaries to sustain life, basic things like food, shelter, clothing and education. These are the things that are necessary to live and without these things, a person could not exist.

Example: A is a minor boy and B supplies him with certain necessary goods to live. However, A has nothing and he could pay for such necessary goods. In this case, B can reimburse from the property of A. A caretaker or guardian of a minor is the best example. 

2. Payment by an Interested Party. (Sec. 69)

Section 69 of the Contract Act, provided that "A person who is interested in the payment of money which another person is bound by law to pay and who therefore pays for it, is entitled to be reimbursed by the other person."

The section says that when an individual shows interest in certain property or goods and pays the amount for that on the behalf of the owner of that property or goods, then the one paying shall claim it later from the one who is liable to pay to the owner of the property or goods.

Example: A is a Zamindar, and B holds one of his lands on lease in Harayana. The revenue of A's land is payable to the State Government of Harayana in arrears. Therefore, the land ends up being advertised for sale by the State Government. According to the Revenue Law, if the land once is sold, it will end B's lease. To prevent this sale, B pays A's dues to the State Government. A is bound to pay back to B.

The above example states the following conditions -

  1. The party that is paying the other party's dues is interested in the payment.
  2. The party whose payment is due was in fact bound by the law to repay.

3. Obligation of a Person Who Enjoys the Benefit of any Non-Gratuitous Act. (Sec. 70)

Section 70 of the Contract Act, stated that "When a person lawfully does anything for some other person or delivers anything to some other person, not with an intention to do gratuitously, and such other person enjoys the benefit thereof, later the person is bound to make compensation to him in respect of and/or  to restore the thing  so done or delivered."

In this section, if a person lawfully does something to another person (i.e. delivery of goods and/or services) without an intention to do so gratuitously and then after the other person enjoys the benefit of that something done to him (i.e. the goods and/or services delivered to him) then later the person who consumes the goods and services is liable to make compensation to that person.

Example: Courier delivers the goods at B's house instead of A's house. Later, B consumes the goods because he treats the goods as he owns. Here, B is bound to make compensation to A.

Here, we have to understand, What is the gratuitous act? The meaning of the gratuitous act is when a person does something for another person without the expectation of return. For example, giving a gift to someone is a gratuitous act. Where there is no expectation in return for the gift.

4. Finder of the Goods (Sec. 71)

Section 71 of the Contract Act, stated that "When a person who finds goods which are belonging to another person and takes them into his custody, is subject to the same responsibility as a Bailee."

In other words, any person who finds the lost goods of another person then he is responsible for the safety of goods and to return them back to the original owner of the goods.

Example: A is the owner of a shop and B came there while purchasing the goods B forget his Mobile at the shop and leaves. A found that mobile. Then A has a duty to keep the mobile safe and return to B.

Rights of the Finder of Goods

Let's see these rights;

1. Right to Lien

The Right to Lien means the person can retain the found goods in his custody until the compensation for all expenditure he spends on the goods or sped in the finding of the original owner.

2. Right to Sue

The Right to Sue means, suppose if the owner had announced a reward to whoever finds the lost goods, then the finder of the lost goods has the right to Sue against the owner for such reward or he can retain the found goods in his custody until the owner does not compensate.

3. Right to Sell

The Right to Sell means the finder of lost goods has the right to sell the goods in the following circumstances;

  • when the owner of the lost goods could not be found even after taking reasonable efforts.
  • when the owner of the lost goods was found but refused to pay compensation to the finder of goods.
  • when the goods are in immediate danger of perishing if not used.
  • if the lawful charges of the finder amount to two/thirds of the total value of the lost goods.

Duties of the Finder of Goods

Let's see these duties;

  1. The duty of the finder of lost goods is to take reasonable care of them.
  2. The finder of goods cannot use it for personal purposes.
  3. The duty not to mix the lost goods with his own goods
  4. The duty to make reasonable efforts to find the original owner of the lost goods.

5. Liability of a Person to Whom Payment is made by Mistake or Under Coercion. (Sec. 72)

Section 72 of the Contract Act, stated that "A person to whom the money has been paid or anything has been delivered either by mistake or coercion, must repay or return it.

When the money has been paid to someone or something is delivered to the person by mistake or under coercion then he is liable to pay it back.

Example: A and B jointly owe some money from Z. Later, A pays all money to Z. But B is unaware of it, then B also pay some amount to Z. In this case, Z is liable to pay back it to B.

Conclusion

The valid contract has certain essential elements as per section 10 of the Indian Contract Act, 1872. But, It can be said that the quasi-contracts are not contracts as per Contract Act, but the obligations imposed by law and only in certain situations. Quasi-contracts only create obligation so that there is no unjust enrichment on one party.

Referred Books:

2 comments

  1. Sir plz Provide the notes of indian penal code and cpc. And the notes are really very nice.
    1. Ok
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