“Law Master’s Publication”
“Quasi Contract”
Prof. Santosh D. Bhosale 98
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QUASI-CONTRACT OR CERTAIN RELATIONS RESEMBLING THOSE
CREATED BY CONTRACT
(Ss. 68 T0 72)
QUESTION BANK
Q.1. “Quasi contracts rest on the ground of equity that a person shall not be allowed to
enrich himself unjustly at the expense of another”. Explain.
Q.2. Explain the concept of ‘quasi contract’. What are the various types of quasi
contract?
Q.3. What are ‘quasi contracts’? Enumerate the quasi contracts dealt with under the
Indian Contract Act.
SHORT NOTES
1. Right of Finder of Goods
2. Quasi contract
SYNOPSIS
As if a contract
“Law Master’s Publication”
“Quasi Contract”
Prof. Santosh D. Bhosale 99
I.
Meaning of ‘Quasi Contract’:-
In English law, a ‘quasi-contract’ is called ‘certain relations resembling those
created by contract’ in the Indian Contract Act. Thus, the concept of “Quasi-Contract” is
enshrined in the Contract Act as “certain relations resembling those created by contract.”
‘Quasi’ means “as if” or “like” a contract but not contract as such. Each contract
requires a formative and consequential part. The formative part contains proposal,
acceptance, competency of parties, consideration, free consent and a lawful object. The
consequential part contains the actual discharge of the contract, i.e., the ultimate
consequence by way of performance, frustration or breach of contract. In the ‘quasi-
contract’, the first part, i.e., the formative part, is absent, but still, the law imposes some
obligation on the other party. The parties create these obligations through contract;
therefore, they are called in the Indian Contract Act, “obligations or the relations
resembling those created by contract”. They are not the outcome of the party’s agreement,
but in certain cases, the law presumes such relations like those created in the contract.
II]
Evolution of the concept of ‘Quasi Contract’:-
Lord Mansfield is considered to be a founder of a ‘quasi-contract’ obligation. He
explained the quasi-contract principle in Moses V/s Macferlan in 1760 as “law, as well as
justice, should try to prevent unjust enrichment , i.e. enrichment of one person at the cost
of another.”. The quasi-contract is based on the principle of natural justice and equity.
III. Provisions of ‘Quasi Contract’ under ‘Indian Contract Act’:-
Ss. 68 to 72 of the Indian Contract Act incorporates the principle of quasi-contract
under the heading of ‘certain relations resembling those created by contract’ as follows:-
1)
Necessaries supplied to an incompetent person (S. 68):-
Minor’s agreement is void ab initio. However, necessaries supplied to minors are
exceptions to this rule. In other words, the minor has to be reimbursed for the necessities
supplied to him by the other person. The obligation of a minor /lunatic to pay for
necessaries supplied is not based on liability under contract but on quasi-contract. S. 68 of
the Act provides that if a person is incapable of entering into a contract, or anyone whom
he (Minor) 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.
Illustration
(a) A supplies B, a lunatic, with necessaries suitable to his life. A is entitled to be
reimbursed from B’s property.
(b) A supplies the wife and children of B, a lunatic, with necessaries suitable to
their condition in life. A is entitled to be reimbursed from B’s property.
“Law Master’s Publication”
“Quasi Contract”
Prof. Santosh D. Bhosale 100
Meaning of “Necessaries”-
“Things necessary are those without which an individual cannot reasonably exist.
In the first place, there is no doubt about food, raiment, lodging and the like. Again, by
properly cultivating the mind, we may say that the support of the body, instruction in art
or trade, and intellectual, moral, and religious education may also be necessary.”. What is
necessary is the question of fact, which is to be decided in each case.
The debt incurred for performing the funeral obsequies of the father of a minor is a
necessity and is recoverable.
2)
Reimbursement of expenses incurred by the person who is interested in
payment (S. 69):-
A person interested in the payment of money that another is bound by law to pay
and who, therefore, pays it is entitled to be reimbursed by the other.
Illustration
B holds land in Bengal on a lease granted by A, the Zamindar. The revenue payable
by A to the Government is in arrears, so his land is advertised for sale by the Government.
Under the revenue law, the consequence of such a sale will be the annulment of B’s lease.
B, to prevent the sale and consequent annulment of his own lease, pays the Government
the sum due from A. A is bound to make good to B the amount so paid.
3)
Obligation of a person enjoying benefits of the non-gratuitous act (S.70):-
Where a person lawfully does anything for another person or delivers anything to
him, not intending to do so gratuitously, and such other person enjoys the benefit thereof,
the latter is bound to compensate the former in respect thereof or restore the thing so done
or delivered.
Illustrations
(a)
(b)
A, a tradesman, leaves goods at B’s house by mistake. B treats the goods as his
own. He is bound to pay A for them.
A saves B’s property from fire. A is not entitled to compensation from B if the
circumstances show that he intended to act gratuitously.’
1
AIR 1933 Oudh 132.
2
(1894) 18 Mad. 88.
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Facts: An already existing tank was providing water to eleven villages for irrigation.
Some of the villages were Zamindari villages, and the others were under Government
control. The government made certain repairs and improvements to preserve the tank and
improve its capacity. The Government did not intend to do it gratuitously, and the
Zamindars enjoyed the benefits thereof.
The Court held:- Zamindars were held liable to pay proportionate expenses to spend
by the Government.
4)
Responsibility of Finder of Goods (S.71):-
A person who finds goods belonging to another and takes them into his custody is
subject to the same responsibility as a bailee.
A finder of goods is a bailee thereof and, as such, bound by the duty of reasonable
care. He is bound to return the goods to the owner when found.
Rights of Finder of Goods: -
(1)
Right to Lien (S.168):-
A finder of goods has a right to retain the goods against the owner until he receives
compensation for trouble and expenses voluntarily incurred by him:-
i) to preserve the goods, and
ii) to find out the owner.
But he cannot sue in court for such trouble and expenses.
(2)
Sue for Reward (S. 168):-
Where the owner has offered a specific reward for the return of goods lost, the finder
may sue for such reward and may retain the goods until he receives it.
(3)
Right to Sell (S.169):-
Where the thing found is commonly the subject of sale, and if the owner cannot be
found with reasonable diligence, or if he refuses to pay the lawful charges of the finder, the
finder may sell the goods: -
i)
When the thing is in danger of perishing or of losing the greater part of its value or
When the lawful charges of the finder, in respect of the thing found, amounts to two
third of its value.
ii)
5)
Obligation arising out of money paid under Coercion, Mistake or Voidable
contract (S. 72):-
A person to whom money is paid (or anything delivered) by mistake or under
coercion should repay or return the same.
Illustrations
A and B jointly owe 100 rupees to C. A alone pays the amount to C, and B, not
knowing this fact, pays 100 rupees over again to C. C is bound to repay the amount to B
(a)
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(b) A railway company refuses to deliver certain goods to the consignee except upon
the payment of an illegal charge for carriage. The consignee pays the sum charged in order
to obtain the goods. He is entitled to recover so much of the charge as it was illegally
excessive.
Mistake under S. 72 covers both mistakes of fact as well as mistakes of law.
Fact: - Amount credited twice in the account of the defendant by mistake.
Held: - Defendant cannot enrich at the cost of the Bank. Defendant has to remit extra
Credited amount.
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3
(AIR 2011 Ker 58)