Introduction – Quasi Contracts
Quasi contracts are not true contracts in the conventional sense because they do not arise from the consent of the parties. Instead, they are obligations imposed by law to prevent unjust enrichment. The concept ensures that a person cannot benefit at the expense of another unfairly, even in the absence of an agreement.
Under the Indian Contract Act, 1872, Sections 68 to 72 deal with quasi-contracts. These sections create legal obligations resembling contractual duties, though there is no express contract or consent. Quasi-contracts are often termed “contracts implied by law” to distinguish them from contracts implied by conduct (which may show consent).
Definition
While there is no direct statutory definition, Quasi Contract can be understood as:
“A legal obligation imposed by law to prevent unjust enrichment of one party at the expense of another, arising without any agreement between them.”
Key Principle:
Nemo debet locupletari ex aliena iactura – No one should enrich themselves unjustly at the expense of another.
Nature and Characteristics
- No Consent Required: Quasi contracts are created by law, not by the will of parties.
- Legal Obligation: They create enforceable duties similar to those in contracts.
- Prevent Unjust Enrichment: The main objective is equity and fairness.
- Limited Scope: They arise in specific situations as defined in Sections 68–72 of the Indian Contract Act.
- Remedy: The person who has been unjustly enriched must restore the benefit or pay compensation.
Types of Quasi Contracts under Indian Contract Act
1. Supply of Necessaries (Section 68)
- A person who provides necessaries to someone who is incapable of contracting (like a minor or lunatic) is entitled to be reimbursed from the property of that person.
- Case Example:
Mohd. Ishaq v. Syed Ali (1910) – Supplier of essential goods to a minor could claim reimbursement.
Read Case
2. Payment by Mistake or Under Compulsion (Section 69)
- If a person receives payment by mistake or under coercion, the payer can recover it.
- Example: A pays B ₹10,000 thinking he owes him, but no debt exists; B must return it.
- Case Example:
Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd. (1943) – Recovery for payment made under mistake.
3. Obligation to Pay for Non-Gratuitous Act (Section 70)
- When a person lawfully does something for another without intending it gratuitously, the other person is bound to compensate.
- Example: A cleans B’s warehouse without B’s request but believing it was necessary; B must pay if benefited.
- Case Example:
P. Krishnamurthy v. R. Balakrishna (1958) – Compensation awarded for services rendered that benefited the recipient.
4. Finder of Goods (Section 71)
- A person finding goods belonging to another and taking them into custody is liable to take care and deliver them to the rightful owner.
- Example: Finder of a lost horse is responsible for its care until returned.
5. Liability of Person for Goods Received, Not Intended as Gift (Section 72)
- If someone enjoys the benefit of goods or money under circumstances where it would be unjust to retain it, they must compensate.
- Example: If A mistakenly receives goods meant for B, A must return or compensate.
- Case Example:
Derry v. Peek (1889) – While primarily about misrepresentation, principles of restitution apply in quasi contracts.
Importance of Quasi Contracts
- Prevent Unjust Enrichment: Ensures no party benefits unfairly at another’s expense.
- Protect Vulnerable Persons: Supplies to minors, lunatics, or incapacitated persons are reimbursed.
- Ensure Social and Commercial Justice: Obligations arise even without consent, maintaining fairness in transactions.
- Bridge Gaps in Contract Law: Quasi contracts cover situations where no express contract exists but equity demands restitution.
Distinction from Ordinary Contracts
| Feature | Ordinary Contract | Quasi Contract |
|---|---|---|
| Consent | Required | Not required |
| Formation | Agreement of parties | Imposed by law |
| Basis | Consideration | Prevention of unjust enrichment |
| Enforceability | By mutual agreement | By legal obligation |
| Example | Sale of goods | Payment made by mistake, supply to minor |
Conclusion
Quasi contracts are an essential tool of Indian Contract Law to ensure justice and fairness in transactions without express agreements. By imposing obligations ex lege (by law), they prevent unjust enrichment and protect parties in situations where consent or formal contracts are absent. Sections 68–72 of the Indian Contract Act, 1872 provide a clear framework, covering necessaries, mistaken payments, non-gratuitous acts, and custody of goods, ensuring equitable outcomes in commercial and social contexts.
Also Read: Consideration in Contract Law