Quasi Contracts: Meaning, Features and Types

A Quasi Contract is a term for a contract implied in law, which acts as a remedy for a dispute between two parties that don’t have a contract. Quasi Contract is a legal obligation that is decided by a judge for one party to compensate the other. Hence, it corrects a circumstance in which one party acquires something at the expense of the other. The core principles behind a Quasi Contract are justice, equity, and a good conscience which is based on the maxim “No man must grow rich out of another person’s loss”.

Geeky Takeaways:

• A quasi-contract is a remedy between two parties who have no contract with one another.
• A quasi-contract is created by a judge to correct a circumstance in which one party acquires something at the expense of the other.
• A plaintiff must have furnished an asset or service to another party such that the defendant should have known to pay for it.
• A defendant must have accepted the item but made no effort or offer to pay for it even when they knew they should.

What is a Quasi Contract?

Quasi Contract acts as a remedy for a dispute between two parties that don’t have a contract. A quasi contract is not a traditional contract and it has a legal obligation which is decided by a judge for one party to compensate the other. The legal principle is to make one party pay the other as if a contract or an agreement already exists between them. So, the obligation of the defendant to be bound by an exchange is viewed to be implied by law.

There are certain cases where the law implies a promise and imposes obligations on one party while conferring rights to the other, even when there is no presence of essential elements of a contract. Though these promises are not legal contracts, the court recognizes them as relations resembling a contract and enforces them like a contract.

For example, X and Y enter a contract under which X agrees to deliver a basket of fruits at Y’s residence and Y promises to pay ₹ 1,500 after consuming all the fruits. However, X erroneously delivers a basket of fruits to Z’s house instead of Y’s. When Z gets home he assumes that the fruit basket is a birthday gift and consumes them. Although there is no contract between X and Z, the court treats this as a Quasi Contract and orders Z to either return the basket of fruits or pay Y.

Features of a Quasi Contract

1. Absence of Agreement: Quasi Contracts arise when there is an absence of an agreement between the parties. There is no express or implied contract between parties that specifies their rights and obligations.

2. Implied by Law: Quasi Contracts are not created by the intention of the parties but rather imposed by the law to prevent unjust enrichment of one party at the expense of the other.

3. Obligations to Pay: One party is obliged to pay a certain amount of money to the other party in the way the law imposes.

4. No Mutual Consent: Quasi Contracts are not based on mutual consent but instead on the law’s imposition of an obligation to prevent injustice.

Types of Quasi Contract

The types of Quasi Contract are given in Section 68 to Section 72 of the Indian Contract Act, 1872 as follows:

• Section 68: A person incapable of making contracts is provided with the supplies by a third party on behalf of the incapable person or anyone to whom he is legally obligated to support. Third parties can recover the supplier’s price from the property of the unable person.
• Section 69: A person making payment on behalf of another party is obligated to pay the money according to the law. So, the person who made the payment is entitled to get reimbursement from the other party.
• Section 70: When a person does something lawful for another person or delivers something without any intention to do the same gratuitously, the receiving party is obliged to compensate the former party.
• Section 71: A person who finds goods that belong to the other party and takes ownership of them has the same responsibility as a bailee.
• Section 72: Someone who has been delivered or paid under coercion or by mistake must repay or return the money.

Quasi Contract vs. Contract

• Quasi contract is implied in law; whereas, a Contract can be either express or implied.
• Quasi Contracts are ordered by a judge; whereas, Contracts are initiated by an agreement between the parties.
• No contract exists in a Quasi Contract; however, in the case of a Contract, legality exists.

Legality of a Quasi Contract: Since the agreement is constructed in a court of law, it is legally enforceable so neither party has to agree to it. The purpose behind quasi contract is to render a fair outcome in those situations where one party has an advantage over the other. The defendant must play restitution to the plaintiff to cover the value of the item.

Conclusion

Quasi Contracts is a legal concept that is used to prevent unjust enrichment of one party at the expense of the other. Quasi Contracts arise when there is no express or implied contract between the parties. The obligation to pay is imposed by law on one party. The Indian Contract Act, 1872 recognizes Quasi Contracts and provides them with remedies for parties in such situations.

Frequently Asked Questions (FAQs)

1. What are Quasi Contracts?

Answer:

A contract also known as an Implied Contract in which a defendant is ordered to pay restitution to the plaintiff is known as Quasi Contract. It means that a contract is put into existence when no such contract exists between the parties.

2. What are the types of Quasi Contracts?

Answer:

The types of Quasi Contract are outlined in section 68-72 of the Indian Contract Act, 1872.

3. What is the advantage of a Quasi Contract?

Answer:

The advantages of quasi contract includes preventing one party from unfairly benefitting at the expense of another.

4. What is the disadvantage of a Quasi contract?

Answer:

There is no provision available for the recovery of more amount than what has been received by the plaintiff.