Quasi Contract

An agreement enforceable by law is a contract but it is not mandatory that all the contracts are made by the parties and with the proper procedure which includes an offer, acceptance, and consideration. Sometimes contracts are made in the form of obligations imposed by courts. These contracts are called Quasi-contracts. Chapter 5 of the Indian Contract Act, 1872 deals with quasi-contracts.

A contract when parties have not previously decided obligations on each other is a quasi-contract. These contracts come in existence when there is a dispute with regards to payment for goods and for services provided. The aim of these contracts is to prevent one party from getting unfair benefit which he doesn’t deserve. Quasi-contracts works on the maxim “No man must grow rich out of other’s loss”. It follows the principle of justice, equity and good conscience. Quasi Contracts are generally known as constructive or implied-in-law contracts.

Let’s take a look at an example of Quasi Contracts

Seema bought a cake. The shop seller promised to deliver it to Seema’s home. Later, a delivery boy delivered the cake to Megha’s house. Megha, believing that it is her birthday gift, consumed the cake. Seema and Megha were not in a binding contract but here the court may impose an obligation on Megha to return or pay for the cake.

Theory of Implied Contract

Quasi-contracts are generally based on the theory of implied contracts. Implied contracts are not written contracts, they come into existence due to the action of the parties.

Illustration

A buys a refrigerator from B. The implied contract between A and B is that the refrigerator is fit to keep food cool. If the refrigerator is not capable of doing that then A is entitled to either return it or change it with any other working refrigerator.

Theory of Unjust Enrichment

Quasi-contracts are based on the theory of unjust enrichment, which says that nobody must enrich or get benefited at the expense of others. If such a condition arises then the person who got benefited must pay to the other.

Illustration

A bought a laptop from B. while doing online payment A mistakenly added a wrong account number and the whole amount for laptop got transferred to C’s account. C got benefited at the expense of A, or we can say that C got unjustly enriched at the expense of A.

Let’s take a look at the situations defined in Indian Contracts Act, 1872 when can Quasi Contract be made.

Section 68 to 72 deals with these conditions

Section 68

Claims for necessaries supplied to a person incapable of contracting, or on his account

Section 11 of the act says that every person is allowed to enter into a contract who is of the age of majority, who is of sound mind and not disqualified from contracting from any law to which he is subject.

What is the majority age?

Section 3(1) of The Majority Act, 1875 says that every person who is domiciled in India shall attain the age of majority after completing the age of eighteen years.

In simple words, a person who hasn’t attained the age of majority/ is a minor or a person who is of unsound mind can’t enter into a contract but under some circumstances, these incapable persons are liable to fulfill the conditions of a contract which actually arose due to consequences of a quasi-contract.

Section 68 of the Act says that if a person supplies some life necessaries to a person who is incapable of entering into a contract then the supplier is entitled to be reimbursed from the property of that incapable person.

Section 69

Reimbursement of the person paying money due by another in payment of which he is interested

Section 69 says that if a person pays an amount which another person is bound to pay then the first person is entitled to be reimbursed by the other person.

Section 70

Obligation of person enjoying benefit of non-gratuitous act

Article 70 of the Act says that if a person lawfully does something for another person or delivers something to a person without an intention to do such act out of ‘kindness’, and another person enjoys the benefit thereof, the latter is liable to pay for the benefit he has enjoyed.

Principle behind this section is that no person shall enjoy the benefit of any other person’s property. If one does then he/she is bound to pay for the benefit.

Section 71

Responsibility of finder of goods

Section 71 says that if a person finds something which he knows belongs to someone else, the person has the same responsibility as that of a bailee.