Quasi Contract
Legal obligations created by law to prevent one person from unfairly benefiting at another person's expense.
Introduction
Sometimes situations arise where there is no actual contract between parties, yet fairness requires that one party should compensate the other. In such cases, the law creates obligations similar to those found in a contract.
These obligations are called quasi contracts or relations resembling contracts under the Indian Contract Act, 1872.
Meaning / Definition
A quasi contract is not a real contract because the parties have not made any agreement. Instead, the law creates rights and obligations between them to ensure fairness and justice.
The main idea behind quasi contracts is the doctrine of unjust enrichment (unfair benefit). This means that one person should not gain a benefit at the expense of another person without paying for it.
Example:
If goods are mistakenly delivered to a person's house, that person must return the goods or pay for them. He cannot keep them and enjoy the benefit.
Essentials of Unjust Enrichment
For a claim based on unjust enrichment, the following conditions must be proved:
- The defendant (person being sued) received a benefit.
- The benefit was received at the expense of the plaintiff (injured party).
- It would be unfair or unjust to allow the defendant to keep the benefit.
Types of Quasi Contracts
Supply of Necessaries (Section 68)
If a person supplies necessaries (essential goods or services) to someone who is incapable of entering into a contract (such as a minor or mentally incapable person), the supplier is entitled to be reimbursed from that person's property.
Example:
If a person supplies food or medicine to a minor, the supplier can recover the cost from the minor's property.
Payment by an Interested Person (Section 69)
If a person pays money which another person was legally bound to pay, and the payment was made to protect his own interest, he has the right to recover that amount.
Example:
If A pays property tax on B's property to prevent it from being sold by the government, A can recover the money from B.
Obligation to Pay for Non-Gratuitous Acts (Section 70)
When a person lawfully does something for another person, without intending to do it for free, and the other person enjoys the benefit, then the person who received the benefit must pay for it.
Example:
A repairs B's house with B's knowledge, and B enjoys the benefit of the repairs. B must compensate A.
Responsibility of Finder of Goods (Section 71)
A person who finds goods belonging to someone else has the responsibility of a bailee (person who temporarily holds goods for another).
He must take reasonable care of the goods and try to return them to the true owner.
Money Paid by Mistake or Under Pressure (Section 72)
If a person receives money or property by mistake or under coercion (pressure or force), he must return it.
Example:
If money is transferred to someone by mistake, the person who received it must return it.
Distinction Between Contract and Quasi Contract
| Basis | Contract | Quasi Contract |
|---|---|---|
| Agreement | Based on agreement between parties | No agreement between parties |
| Consent | Parties voluntarily consent | Obligation imposed by law |
| Formation | Created by offer, acceptance and consideration | Created by law to ensure fairness |
| Purpose | To enforce promises made by parties | To prevent unjust enrichment |
Practical Example
Suppose a delivery company mistakenly delivers a package to the wrong house. The person who receives the package knows that it does not belong to him.
Under the principle of quasi contract, he must return the package or compensate the rightful owner, because keeping it would amount to unfair benefit.
Summary
- A quasi contract is not an actual contract, but a legal obligation created by law.
- It exists to prevent unjust enrichment (unfair benefit).
- The Indian Contract Act refers to it as relations resembling contracts.
- Sections 68 to 72 of the Act describe different quasi contractual situations.
- Examples include supply of necessaries, payment by an interested person, non-gratuitous acts, finder of goods, and payment made by mistake or coercion.