An Introduction
Quasi Contract laws have been derived from the Latin statement “Nemo debet locupletari ex aliena jactura” which proclaims that no human being should gain an unjust benefit from another’s loss. It was one of the main principles of Roman law.
The word ‘Quasi’ means having some resemblance to but not all. Similarly, Quasi Contract means laws that are like regular contract law but not quite so. A regular contract should have some essential components to be considered valid. It includes offers, acceptance, consideration, two or more parties who are legally and mentally capable etc.
Whereas Quasi-contract definition is based more on the principles of natural law such as moral conscience, justice, honesty, duty towards another human being etc.
The main difference between Contract and Quasi Contract is that in the case of the latter, there is no exchange of offer, acceptance, or consideration between two or more parties. However, it is still legally enforceable.
For example, if a package belonging to A is delivered to M, then M is legally obligated to return it to A. If M uses up the contents of the packaging for himself, then A has the right to sue him. In that case, the court can order M to reimburse A under Quasi-contract law.
Types of Quasi Contracts
According to the Indian Contract Act of 1872, there are five types of Quasi-contract laws. These have been discussed below:
Supply of Necessities
An individual who is legally incapable of entering into any agreement, or if the person is unable to support themselves, then another individual who is legally responsible for supporting the former, then the latter will be reimbursed from the estate of the dependent. Instances of Quasi-contract cases include, If C supports the family of his friend D, who is mentally incompetent, then C should be provided with reimbursement from D’s property.
Payment by an Interested Party
Under Quasi-contract in business law, if any individual wishes to make payment of money which the other party is legally bound to pay and who eventually bears the cost, shall receive retribution from the latter. For Instance, if person A pays off B’s outstanding debt, then the latter must reimburse A under Quasi-contract law.
Obligation to Pay for a Non-Gratuitous Act
In circumstances, when a person performs an act for another which he or she is legally bound to do and which is not performed out of gratitude, then the person for whom it is being done must compensate the former.For Instance, if a shopkeeper delivers some goods to B’s house, then B is bound to pay the shopkeeper for services performed. However, if the shopkeeper returns goods that B had forgotten, then B is not liable to compensate him or her as it was an act of gratuity.
Finder of Goods
A person who comes across any item belonging to another individual, and takes it under his custody, then he or she must take proper care of the thing as much as he or she would take care of an item of the same value, bulk, and quality until the appropriate owner is found. If the owner is not found, then the finder can retain the item as their own according to Quasi-Contract.
A mistake of Coercion
Section 71 of contract law states that an individual who receives any item by mistake or through coercion is legally bound to return the items or repay the person who initially made the payments. For example - if a parcel is delivered belonging to B, is delivered to A, then A must return it to B promptly.
Unjust Enrichment
One of the main features of Quasi-contract is unjust enrichment. In the case of unjust enrichment, one party derives benefits either by mistake or through the other party’s misfortune or loss. Additionally, when an individual enjoys advantages for which he or she has made proper payments or has not worked for it, and which was not intended as a gift, then it is also termed as unjust enrichment. However, courts consider several other aspects while deciding whether an unfair enrichment has taken place or not under Quasi-contract in the Indian contract Act. These elements are mentioned below:
The defendant must have received benefits or advantages to which he or she is not entitled to.
The plaintiff should have sustained loss or damage of some kind when the defendant received unjust enrichment.
The court also needs to prove that the enrichments or benefits in question are unfair to create a Quasi-contract.
There should be no proper explanation for enrichment. Additionally, the plaintiff also needs to justify why it is unfair for the defendant to be in possession of the goods without paying for them.
FAQs on Quasi Contracts
1. What are the Main Quasi Contract Elements?
The three main elements of quasi-contract theory are as follows:
The individual must provide evidence for the products for which they are asking for compensation under the Quasi contract.
There should be proof that defendants were in possession of the goods in question and have enjoyed their benefits.
The defendant also should have accepted goods under unethical circumstances for which the owner did not receive any reimbursements.
2. What is Quasi Contract Recovery?
One can avail recovery under various kind of quasi-contract in the following circumstances:
When there is no contract, under which the plaintiff can avail compensation.
When there exists a contract that cannot be legally enforced or which is unjust.
In situations, when the plaintiff himself has conducted a whole or partial breach of a valid, legal contract which has resulted in benefits for the other party.
Additionally, one should also keep in mind the term ‘quantum meruit’. This term is used by law courts to determine the extent of severity of the damage, based on which courts decide the reimbursement amount in case of a quasi-contract.
3. What are the requirements for a Quasi-contract?
Here are some aspects that are required for a court judge to issue a Quasi-contract:
Either the plaintiff must furnish a tangible item or service to another party (or the defendant), with the expectation or implication that the payment would be given.
The defendant must have accepted or acknowledged receiving the item, but made no effort or offer to pay for it.
The plaintiff must then also express why it is unjust for the defendant to receive the good or service without paying for it. It means that the plaintiff must establish that the defendant received unjust enrichment.
4. State an example of a Quasi-contract.
An example of the Quasi-contract could be if one person offers to pay Rs 5000 to another person to help them move their belongings to a new apartment. This is a verbal agreement and there is no formal contract of the same. So, the person helping commits to take up the job and turns down another for the same. But when he or she shows up, the person who was to pay says that they don’t require his or her services anymore. In this case, the person who lost the work and the money could file a civil suit, asking for the payment to be made. In this case, the judge may institute a Quasi-contract, if they think money is owed.
Another circumstance of a Quasi-contract could be when a pizza is delivered to the wrong address, to someone who isn’t the one that’s paid for it. If the individual at the incorrect address does not address the error and keeps the pizza instead, they are seen as having accepted the food. Thus be obliged to pay for it. A court could then issue a Quasi-contract that requires the pizza recipient to pay back the cost of the food to the party who purchased it or to the pizzeria if it subsequently delivered a second pie to the purchaser. The restitution mandated under the Quasi-contract aims for a fair resolution of the situation.
5. What are the advantages and disadvantages of a Quasi-contract?
Advantages:
It gives the plaintiff a chance to appeal for justice in the absence of a legal contract.
It prevents one party from getting an undue advantage over the cost of other parties because it is based on the principle of Unjust Enrichment.
It is a contract that is created by the court’s order, so no party involved can try to disagree with it. All the parties involved will be obliged to follow it.
Disadvantages
The enriched party will not be held liable in cases where the benefit received by him was tendered negligently, unnecessarily, and by the miscount.
It is mostly created only to an extent that is found necessary for preventing unjust enrichment. The plaintiff won’t receive any profit or extra compensation, which he would have earned if there was a complete legal agreement between the parties involved.
