Quasi- Contracts

By Floren Kesharwani 11 Minutes Read

Introduction

• An act of voluntariness that results in duties for the author and a third party that are not subject to the terms of the contract, subject to a regime akin to the contractual one. Rights or obligations resulting from relationships that resemble those established by a contract are covered under quasi-contracts. Because it isn’t a legitimate contract, it is referred to as a non-consensual contract based on the parties’ agreement.
• To avoid unjust enrichment, the law imposes a quasi-contractual obligation. This is also known as a constructive contract or an implicit contract under the law. In the absence of a genuine contract, a court may assume a quasi-contract; however, this does not apply when there is already an express or implicit contract covering exactly the same subject matter.
• A quasi contract is not a real contract; hence a court may impose an obligation without taking into account the parties’ intentions and without requiring consent from both parties. Restitution or recovery under the idea of quantum meruit is usually the remedy available to a person suing for damages under a quasi-contract. Each case is evaluated individually to ascertain liability.
• In the case of Baliey v. West[1], the Court acknowledged the concept of a quasi-contract and determined that “benefits granted by plaintiff to defendant, defendant’s appreciation of such benefits, and defendant’s acceptance and retention of such benefits under circumstances where it would be inequitable to retain the benefits without payment of the value thereof” are the essential components of a quasi-contract.
• Further, in the 2004 case of Moses v. MacFarlane[2], the idea of quasi-contracts was again presented and explored. This was an English case, and the ruler of Mansfield declared that such commitments, or to put it another way, the duty underlying quasi-contracts, were based on the law and justice with the expectation that no one would gain an unfair advantage at the expense of another.
• Furthermore, in India the courts have ruled that a key consideration in assessing liability resulting from a quasi-contractual arrangement is the unjust enrichment concept.
• The apex court judgment, in the case of State of Haryana v. Raja Ram (2017)[3], held that quasi-contracts can be created even in the absence of a formal contract. Moreover, the court emphasized how crucial it is to apply the unjust enrichment principle and avoid receiving unfair benefits when determining what responsibility arises from a quasi-contractual relationship.
• The courts have observed that the principle of restitution should be used to put the person who was wronged back in the same position if they had gained an advantage or profit at the expense of another.

Requirements of a Quasi- Contract

• The two primary theoretical pillars upon which quasi-contract liabilities rest are as follows:

1. Inferred agreements: Refer to circumstances where, despite the absence of a formal written or oral agreement, the law indicates the existence of a contract between parties. These agreements try to stop one party from unfairly profiting at the expense of another, and they are founded on the idea of unjust enrichment.
2. Improper enrichment: Refer to when unequal pay is returned, it describes a situation in which one party unfairly profits at the expense of another. Even in the absence of a formal contract, quasi contracts seek to avoid unjust enrichment by imposing legal responsibilities. According to the quantum meruit theory, the remedy usually entails restitution or recovery (fair value of services provided)

• The Indian Contract Act 1872, outlines five criteria that give rise to a quasi-contract, which are covered in sections 68–72.
• Recall that the parties do not have a contract and that the law imposes contractual liability because of certain unusual circumstances.

• Section 68 states the claim for necessities given to a person incapable of contracting or on his account.
• Section 69 states the reimbursement of a person paying money owed by another in which he has an interest.
• Section 70 states the obligation of a person benefiting from a non-gratuitous act.
• Section 71 states the finder’s responsibility for goods.
• Section 72 states the liability of the party receiving payment or having something handed to them by mistake or under force.

Elements of a Quasi- Contract

• There are three fundamental ideas that underpin a quasi-contract.

• Firstly, the plaintiff needs to provide proof of the products or services for which they are entitled to payment.
• Secondly, the defendant had to have taken those products or services and benefited in some way from them.
• Lastly, the plaintiff must not have received any compensation for the unfair circumstances under which the defendant took the goods or services.

• Standard legal contracts usually include clauses that were agreed upon by both parties prior to the products being received or the services being provided. On the other hand, where one party never intended to engage in a formal contract, a quasi-contract takes effect. At this point, the court intervenes to draft a contract and ensure that all parties are treated fairly.
• The same was highlighted in the case of Kailash Nath Associates v. DDA (2015)[4], according to the Delhi High Court, when one party works for another party without a formal contract and the other party benefits from the work or services, that arrangement might be considered a quasi-contract. The court decided that, in accordance with quasi-contractual principles, the party rendering the services is entitled to fair and reasonable compensation.

Difference between a Contract and a Quasi- Contract

Remedy for enforcement of Quasi- Contract

Remedies are an essential component of legal systems because they uphold order, encourage justice, and discourage wrongdoing. There are two remedies for quasi-contract are:-

• Restitution: The law seeks to return the situation to its initial condition when one party unfairly gains an advantage at the expense of another. Restitution is giving the harmed party their money back or making up for the value of the benefit that was given. It stops the person who has been unfairly enriched from keeping the benefit without being fairly compensated.
• Quantum meruit: Means “as much as deserved” in Latin. The party who supplied the goods or services may be entitled to payment based on the reasonable worth of such goods or services if there is a quasi-contractual relationship. When determining fair value, courts take circumstances and market prices into account.

Conclusion

In a nutshell we can state that, despite the fact that there are many different kinds of contracts and that some people would argue that a quasi-contract is one of them, this is not the case due to the numerous distinctions that the aforementioned article highlights. Quasi-contracts are an essential legal idea that maintains justice and fairness in contractual agreements. The restitution, equitable outcomes, and prevention of unjust enrichment are the guiding principles of these contracts. The quasi-contract landmark case which highlights the salient of it in the case of Mohori Bibee v. Dharmodas Ghose[5], in order to stop the abuse of their age. In the area of contractual obligations, knowing and putting these concepts into practice helps create a society that is more just and equal.

[1] 249 A.2d 414

[2]360 F. Supp. 2d 533 (S.D.N.Y. 2004).

[3]SCR (2) 728 1973.

[4][2015] 1 S.C.R. 627.

[5] (1903) 30 cal. 539.

Floren Kesharwani