QUASI CONTRACT UNDER INDIAN CONTRACT ACT

Author: Harsita Karki, Vasudev College of Law, Haldwani, Kumaon University, Nainital, Uttarakhand 

Edited By: Ritesh Singh Shekhawat, MJRPU, Jaipur 

INTRODUCTION

There is a Latin maxim from Roman law, “Nemo debit locupletari ex alien bacteria” which states that from one person’s suffering another person should not be benefitted unfairly. That can be said in this way no one can grow rich from another one’s pain.[1]

In the Indian Contract Act, a contract is said to be formed when two parties form an agreement with all the valid conditions given under the Contract Act and perform their obligations and duties. In a normal contract, one party becomes liable to perform the obligation only when there exists a valid contract and in this when one party breaches the contract it will be liable to compensate for the damage to another party.

But sometimes when there is no valid contract exists but the law considers the whole circumstances as a Contract then it is called a contract. These are not actual contracts and did not originate from the agreement between parties. On the contrary; they are one-of-a-kind legal duties recognized only for avoidance of unjust enrichment. For example, the law does provide for circumstances where one party can unjustly benefit at the expense of another even though there is no agreement. Quasi-contracts are a legal framework in The Indian Contract Act, of 1872 (Sections 68 to 72).

Implied contracts which now come under the category of quasi-contacts are an essential feature in Indian Contract Law. However, this article delves at length into legal provisions related to quasi-contracts and major case laws there along with the relevant doctrines of quasi-contracts as well as remedies available in such cases. The exploration will also help us understand why there is a requirement for quasi-contracts, the topic of nature, and the principles on which they are based Introduction to Quasi Contracts.

KEYWORDS – Quasi-contract, Contract law, Parties, Roman law, Obligation

FEATURES OF QUASI-CONTRACT

  • It is called semi and Constructive Contract as all the essential elements are not present in this Contract.
  • It is based on the principle of Equity it ensures that no one should be deprived of justice and injustice should not be done only because there are missing elements of the valid contract.[2]
  • Rather being arising from an agreement, these contracts are imposed by the Court of law.
  • It is not based on the offer and acceptance rule.
  • This contract came into effect after the obligation had been performed by one party.

PROVISIONS RELATED TO QUASI-CONTRACTS IN THE INDIAN CONTRACT ACT

Quasi-contracts are not real contracts but seem like real contracts, as obligations on the parties are not created by the parties themselves but put upon by the courts on the parties.

In the Indian Contract Act, quasi-contracts are not mentioned expressly but Chapter 5 impliedly mentions the provisions related to quasi-contracts. Sections 68 to 72 explain the nature of the Quasi contract.

Chapter 5 – Of Certain Relations Resembling Those Created by Contract

Section 68– Deals with the claim of money for providing necessities to a minor or incapable person. [3]

  • This section explains that if any person has provided the basic necessities of life to incapable and minor to someone who is unable to fulfill the basic needs of his life. And if the act done by the person is in good faith then he has a right to get the money back. For example, he can reimburse the money from the minor’s property when he attains the majority (if the minor has some property).
  • Necessaries include the fundamental things of life like food, Accommodation, Clothes, Education, Medicine, and marriage. These are important things for one’s survival and on which existence or quality of life is based.

Section 11[4] of the Indian Contract Act provides for the competency of entering into the contract where –

  • Minor is someone who is below 18 years of age
  • An incapable/ Unsound person is one who is not in a state of making any wise and legal decision and who is not in sound person, in this case unsoundness of a person can last till his life or for some years of his life in which he cannot be qualified for entering into a legally bind contract. But after the over of the person’s unsoundness then he can be qualified as competent for contract.
  • EXAMPLE – ‘A’ is the neighbor of ‘B’, who is a minor with no support, So A provides necessities to B that can be suitable to his condition in life. Here A is entitled to be reimbursed from B’s property.

Section 69–Payment made by an interested person. [5]

  • This section explains when a person is lawfully bound to pay the money and due to some reason, he is not able to pay and another person pays on his behalf due to some interest on the good. then the person who had paid is entitled to be reimbursed by the other.
  • Example – ‘A’ lives with his family in rent on ‘B’ house and B is out of town for some reason in that time course electricity bill arrives at the house which B used to submit all the time but due to his absence A pays the bill because he is living in his house but A is entitled to get that money back from B.

Section 70– Obligation to pay non-gratuitous Act[6]

  • This section explains that if any person does something for someone without having any agreement or a contract involved and the person enjoys the benefits of the things done, he will become bound to pay the compensation to the person who is doing the thing for him. Though the work is done here is about having consideration.
  • Things must be done in a lawful way
  • Work must be done with the intention of consideration means non- gratuitous work.
  • The other person must have enjoyed the benefit of the work.

Section 71 – Responsibility of Finder of Goods.[7]

  • Whenever any person finds a good that does not belong to him take that good along with himself and take care as it would do with his own good. In this, the finder of goods will come in the position of bailee and try to find and return the goods to the real owner.
  • In this situation finder of goods has various duties which he must perform like as taking adequate care of the goods, trying his best to find the real owner of the goods, must returning the goods to a real manner in good condition and lawful manner.
  • And if the finder has invested some money of his own for keeping the goods in better condition, he is entitled to get his money reimbursed from the owner.

Section 72– Payment of Delivery via Mistake or Coercion.[8]

  • This section deals with the situation whenever money or anything is delivered to the person to whom that does not belong either by mistake or in coercion, it must be returned to the real owner. If he cannot return the goods to the owner then he will pay the value amount of the goods.
  • Example – if the delivery of ‘X’ order reaches his neighbor at ‘Y’ place by mistake of the delivery agent then Y will return or repay the real owner of the goods.

DOCTRINES RELATED TO THE QUASI-CONTRACT

Doctrine of Unjust Enrichment – This doctrine simply explains that if any individual benefits from someone else money or if he has enjoyed someone else goods and another person suffers due to this then the person enjoying the benefits must reimburse with the amount value.

The doctrine of Quantum Merit –is a Latin phrase that means as much as earned.

This doctrine deals with the value of the work done must be given. It arises in the situation when one party has performed its obligation and another party is not performing his due obligations then he can be sued for compensation for his due diligence.

The doctrine of good faith- in a contract parties have some obligations and duties that they must perform, this doctrine simply states that parties must work in good faith and perform their duties honestly without the intention of doing fraud. Parties must abide by the rules of the contract.

CASE LAWS RELATED TO QUASI-CONTRACT

Damodar Mudaliar vs Secretary of State for India 1894[9]

In this case, a tank was owned by both the government and a zamindar but the zamindar didn’t contribute to the repair of the tank and was done by the government solely. So after the repair work of the tank government sued the zamindar for the expense that came from the repair. The court held that as the government did not do the work gratuitously and lawfully completed its side of the work so zamindar is liable to pay compensation for which he enjoys the benefits.

Kunwarlal Daryavsingh vs Surajmal Makhanlal[10] – In this case, a house and necessities were provided to a minor by his neighbor and later court decided all the expenses made by the neighbor were recoverable.

Ameen Trading Co vs Bank of Baroda[11] – This bank mistakenly transferred the amount of rupees 50,000 to another party firm’s account and the court has decided that the act done was a mistake and the party cannot enjoy that payment and has to return the money to the bank

CONCLUSION & COMMENTS

In the Indian Contract Act, Quasi-contracts protect the party from any losses suffered due to the act of another party. It prevents parties from taking unjust enjoyment at the expense of another person’s loss. These contracts are imposed by the court, not by the parties themselves which makes the obligation legally binding upon them. That’s why these are not called real contracts but constructive contracts. This contract works on the principle of Equity and justice which ensures that justice should be given to all and no one takes advantage of another situation. Part 5 of the contract Act provides sections 68 to 72 that explain the quasi-contract more briefly. These kinds of contracts are necessary for society which protects them from any harm and monetary losses without being in any contractual relation with anyone.

REFERENCES

Online Articles / Sources Referred

  • Sehanawaz, “The Indian Contract Act 1872” Ugc (VCU Jaipur. Rajasthan, 2023) available at: https://deb.ugc.ac.in/Uploads/SelfLearning/HEI-Exempted-U-0748/HEI-Exempted-U-0748_SelfLearning_20231026135504.pdf (last visited August 5, 2024).
  • Essential elements of a Valid Contract, available at https://legalstudymaterial.com/essential-elements-of-a-valid-contract/ (last visited on August 7, 2024)

Cases Referred

  • Damodara Mudaliar And Anr. vs Secretary Of State For India on 18 October 1894, (1895)ILR 18MAD88
  • Kunwarlal Daryavsingh vs Surajmal Makhanlal And Ors. on 14 July, 1961, AIR1963MP58, AIR 1963
  • Ameen trading co vs bank of Baroda [Civil Appeal No. 363 of 2022]

Statutes Referred

  • Contract Act, 1872, s. 68
  • Indian Contract Act, 1872, s. 11
  • Indian Contract Act, 1872, s. 69
  • Indian Contract Act, 1872, s. 70
  • Indian Contract Act, 1872, s. 71
  • Indian Contract Act, 1872, s. 72

[1] Mr. Sehanawaz, “The Indian Contract Act 1872” Ugc (VCU Jaipur. Rajasthan, 2023) available at: https://deb.ugc.ac.in/Uploads/SelfLearning/HEI-Exempted-U-0748/HEI-Exempted-U-0748_SelfLearning_20231026135504.pdf (last visited August 5, 2024).

[2] Essential elements of a Valid Contract, available at https://legalstudymaterial.com/essential-elements-of-a-valid-contract/ (last visited on August 7, 2024)

[3] Indian Contract Act, 1872, s. 68

[4] Indian Contract Act, 1872, s. 11

[5] Indian Contract Act, 1872, s. 69

[6] Indian Contract Act, 1872, s. 70

[7] Indian Contract Act, 1872, s. 71

[8] Indian Contract Act, 1872, s. 72

[9] Damodara Mudaliar And Anr. vs Secretary Of State For India on 18 October, 1894, (1895)ILR 18MAD88

[10] Kunwarlal Daryavsingh vs Surajmal Makhanlal And Ors. on 14 July, 1961, AIR1963MP58, AIR 1963

[11] Ameen trading co vs bank of Baroda [Civil Appeal No. 363 of 2022]