Quasi Contracts

LLB IBPOCUNIT 3

BUSINESS LEGISLATION

Quasi contracts

• Quasi means ‘almost’ or ‘apparently but not really’ or ‘as if it were’

• Obligation between parties is not contractual but one which is treated as contractual by law

• Courts create quasi contracts to protect the unjust enrichment of the parties in dispute over payment of goods or services  

Difference between contract and quasi contract

Contract• Results from the will

of the parties expressed with a view to create an obligation

• Is an agreement

• Has certain essential elements

• Is a full fledged contract and is binding

Quasi contract• Is an obligation

resembling that created by a contract

• There is no agreement at all

• Essentials for formation of a contract are absent

• Resembles a contract. not a full fledged contract. is an implied contract

Types of Quasi contracts:

1. Supply of necessities (Sec.68)2. Payment by an interested person

(Sec.69)3. Obligation to pay for non gratuitous

act (Sec.70)4. Responsibility of finder of goods

(Sec.71)5. Mistake or Coercion (Sec.72)

Section 68“Claim for supply of necessaries to person incapable of contracting”

Necessaries:

Things suited to the conditions of incompetent parties

Includes articles required to maintain a particular person in the state and degree in the life in which he is

Articles without which an individual cannot reasonable exist

Illustration A supplies B, lunatic with necessaries suitable to his condition of life. is entitled to

be reimbursed from B’s property

A minor studying at Cambridge was supplied with clothing, including eleven waist-wats. He already had sufficient clothing with him. It was held that the waist-wats were not necessary articles and so he was not liable to pay for them.

Section 69“Reimbursement of money paid, in which he is

interested”

Essentials:

There must be a person who is bound to make a payment by law. The person paying must himself not be bound to pay. When he is jointly liable to pay, payment by him would not give him the right to recover under this section

Illustration

A and B have been fined jointly Rs500 for selling adulterated ghee. A alone pays the amount of fine in good faith, A cannot later claim contribution from B under Section 69. Notice that although B was bound by law to pay and A has paid B’s share in good faith, yet A cannot recover as he himself was bound to make the payment, being jointly liable with B and was not simply interested in making the payment.

Section 70“Obligation of a person enjoying benefits of non-gratuitous act”

• Person lawfully does anything for another person

• Delivers anything to him non-gratuitously

• Latter is bound to make compensation or restore the thing so done or delivered

• The thing must be done lawfully

• The person for whom the act is done must enjoy the benefit of it.

A, a tradesman, leaves goods at B’s house by mistake. B treats the goods his own. He is bound to pay 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.

Illustration

Section 71:“ responsibility of finder of goods”

His rights:• Entitled to retain the goods until he receives the lawful charges or compensation for retaining the goods and taking care of them. •However, he cannot sue for such compensation unless a specified reward has been advertised by the owner.• Entitled to possess the goods until the true owner is found•Can sell the goods when:

Commodity is perishable Owner cannot be found Owner refuses to pay compensation Compensation amounts to 2/3rd of the value of the commodity

His liabilities:• Responsible to take care of the goods as if they were his own• Must with reasonable diligence trace the true owner

Section 72:“Liabilities of a person to whom money is paid or thing delivered by mistake or under coercion”

A person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it.Illustration:

•A and B jointly owe Rs.100 to C. A alone pays the amount. B not knowing it also pays to C. C is bound to repay the amount to B.•A railway co. refuses to deliver certain goods to the consignee, except upon the payment of illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to receive the excessive amount as paid by him.

References

Mercantile Law N.D.Kapoor, Sultan Chand and Sons.http://www.slideshare.net/CMVerma/quasi-contracts-business-law

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