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Concept Of Quasi-Contract, Under Indian Contract Act, 1872

What if your neighbour ordered a pizza, but it was delivered to you by mistake, and you galloped it, are you bound to pay him? What if you are standing on the roadside and auto-rickshaw comes beside you and the driver asks, do you want to go sector 22 and you sit in the rickshaw, without contemplating about the fare, are you bound to pay? Yes, you are bound to pay in both conditions you can’t make excuses that there was no contract. 
The basis of obligation is a legal maxim “Nemo debet locupletari ex aliena jactura” which means no man should enjoy the unjust benefit at the cost of another. These kinds of contacts are known as a quasi-contract in English law. 
 

Difference between implied contract and Quasi-contract

A person’s assent for an agreement can be express or implied. If it is implied, the requisite formalities for a valid contract are met and it is a perfectly normal contract. However, a quasi-contract is not actually a contract in the traditional sense. It is rather created by a court in order to avoid unjust enrichment. It is a form of equitable relief, allowing a plaintiff to recover the value of a benefit conferred upon defendant whom not otherwise be obligated to pay.
If a plaintiff sued for an implied contract, she was using in the law of contract in respect of a consensually assumed obligation. But, if a plaintiff sues for quasi-contract, she was not enforcing some consensually assumed obligation, but rather an obligation imposed by law. 
 

Essentials to be fulfilled in an action for unjust enrichment 

Following essentials are to be fulfilled in an action for unjust enrichment :
 
1. The defendant must have enriched by receipt of benefit. 
2. Such enrichment must be at the expense of the plaintiff. 
3. Retention of such enrichment is unjust. 
 

What is Quasi Contact in the Indian contract Act,1872

Chapter v of the Indian contract act, 1872 deals with “certain relations resembling those created by contract .” It incorporates those obligations which are termed as a quasi-contract in English law. Indian contract act,1872, deals with 5 kinds of quasi-contract in section 68 to 72.
 
1. Claim for necessities provided to a person incompetent to contract. (section 68)
2. Reimbursement of money paid,  due by another. (section 69)
3.The obligation of a person enjoying the benefit of the non-gratuitous act. (section 70)
4.Responsibility of a finder of goods. (section 71)
5.Liability of the person getting benefit under mistake or coercion. (section 72)
 

Claim for necessaries provided to a person incompetent to contract(section68)

If necessaries are provided to a person incompetent to contract (for example, minor or lunatic), or a person to whom he is legally bound to support (for example, to a lunatic’s wife or children), the person providing such necessaries is bound to reimbursement from the property of such incompetent person. 
No action under a contract can be brought against a person for a claim for necessaries supplied to such an incompetent person or his dependents. 

Reimbursement of money paid, due to another(section 69)

It is based on the principle that the plaintiff, having discharged the defendant’s debt, is entitled to be reimbursed by him. 
For the application of this section following two conditions are to be there:
 
1.one person is interested in the payment of money and he pays it, while, 
2.another person is bound by law but he fails to pay. 
 
The person so making the payment is entitled to be reimbursed by the person who was bound to pay.
One person interested in the payment of money pays it
  • The person who makes the payment and then claims the reimbursement should have an interest in making the payment. 
  • A person voluntary payment of another person’s debt, without having any interest in the payment can’t seek reimbursement.
  • In India, it is enough that the person making the payment should have an interest in making the payment.
  • In England, the person making the payment should have been compelled by the law to pay the debt or discharge the liability of the person.
Another person should be bound by law to pay, but he fails to pay 
  • It is based on the principle that the plaintiff, having discharged the defendant’s debt, is entitled to be reimbursed by him.
 

The obligation of a person enjoying  non- gratuitous act (section 70)

For the application of this section following conditions are to be fulfilled –

  1. A person should lawfully do something for another person or should deliver something to him. 
  2. The person making payment the payment or delivering the goods should not do so gratuitously.
  3. Another person should enjoy the benefit of such payment or delivery. 

If above-mentioned essentials are fulfilled, the person receiving the benefit becomes bound to pay compensation. Compensation can be claimed only if delivery has been made non gratuitously.

  • Enjoyment of benefit by the defendant is necessary. 
  • Unjust benefit to the defendant is also necessary. 
  • This section applies as much to government and corporations as to individuals. 
  • No action can be brought against a minor to recover compensation from him under this section. 

When there is nothing positive done by the plaintiff,  but he merely refrains from doing something, that is not sufficient to entitle to make a claim under section 70.                                                                                                                                     

The responsibility of a finder of goods(section 71)

The position of the finder of goods is to that of a bailee. For instance:
Take as much care of the goods as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk,  quality and value as the good found by him. (section 151)
He should not mix the goods found by him with his own goods. (section 156 and 157)
He is bound to return the goods after the reasonable search.(section 160 and169)
The finder is bound to compensate if due to his default goods are not returned suffer any loss, destruction or deterioration. (section 161)

Under section 169 finder of goods is also authorized to sell the goods found by him when

  1. The owner of goods can’t be found after a reasonable search or owner refuses to pay law full charges of a finder. 
  2. The thing found is in danger of perishing or losing greater part of its value. 
  3. Lawful charges of the finder, in respect of thing, found amounts to two-thirds of its value. 
  4. Finder has right of lien,  i.e., a right to keep possession of property belonging to another person until a debt owed by that person is discharged.
  5. The finder is bailee only against the true owner. 

Liability of person getting benefit under mistake or coercion (section 72)

Section 72 doesn’t apply only to a mistake of fact, it equally applies to a mistake of law.
In Shiba Prasad Singh v. Satish Chandra[1], it was stated that section 72 must be read together with the rest of the Act and in particular with sections 21 and 22, which deals with the mistake. 
The term “coercion “ in this section is used in its general and ordinary sense as an English word not in accordance with its definition contained in section 15.
In Siddheshwar Sahakari Sakhar Ltd v. C. I. T,  Kolhapur[2], it was held “compulsion of law is not coercion. 

Conclusion 

A quasi-contract is traditionally not a contract,  but a compulsion of law. It is based on the principle that no one shall be allowed to enjoy unjustly at the expense of another. A quasi-contract is not only based on the principle of equality but equity also. Chapter V of the Indian Contract Act, 1872, deals with “certain relations resembling those created by contact “. These contracts are different from an implied contract. 
 

References

  1. (1950) 52 BOMLR 17
  2. [193 in ITR 694]
BY- Akash Tiwari
Aligarh Muslim University

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