THE LEGAL WATCH
Trusted Contract Advisory
TLW - Contract Awareness Initiative
TLW - Legal Awareness Initiative
A Quasi Contract is an Obligation that is created by a court or by law one any party to avoid unjust or unfair enrichment/benefit to that party. This often occurs when any party is enriched with some benefit at the expense of another party and retention of such benefit would prove to be unjust. Quasi Contracts are not expressly mentioned in the Indian Contract Act, 1872, however Sections 68-72 under Chapter 5 of the Indian Contract Act talks about ‘Certain relations resembling those created by contracts’ which is inherently what Quasi Contracts Entail.
In India, broadly, quasi contracts as a concept has been discussed and incorporated under Indian Contract Act, 1872 in Chapter V , from sections 68 to 72 of the same.There exists certain responsibilities which by nature are not contractual, but are identical to the contractual obligations and the law as well as the justice require that certain person or persons , must conform to such obligation nevertheless the fact that no contractual breach was ever committed by him . Therefore, the law considers them as contracts founded on the theory of equity. More generally, such situations are known as quasi contracts. The rationale behind existence of quasi-contractual obligations could be very well derived from the two theories broadly first being the theory of unjust enrichment i.e. the enrichment of one person at the cost of another, this principle came from the old maxim of Roman law ‘Nemo debet locupletari ex aliena jactura’ which means that no man must grow rich because of one’s personal loss. Broadly these includes –
1) Claim for necessaries given to or on behalf of an individual incapable of contracting
2)Reimbursement of person paying money due by another in payment of which he is interested
3) Responsibility of the person who had reaped benefits from a non-gratuitous act of another
4) Liability of the finder of goods
5) Liability of the person to whom the money is paid or a thing delivered by force or under a mistake
The characteristic feature of a quasi-contract is the absence of a contract or a mutual consent between the parties. Quasi-contracts are often confused with implied-in-fact contracts. Implied-in-fact contracts are also not contracts in the true sense, as they lack a written agreement. In case of the latter, even though there is no contract between the parties as per the facts, the actions and words of the parties amount to mutual consent over the disputed matter. The difference between the two can be illustrated with an example.
A approaches a doctor for treatment. Here, there is mutual consent between A and the doctor. As A expects treatment from the doctor, the doctor expects payment from A for his services. This is an example of an implied-in-fact contract, wherein the conduct of the parties suggested a mutual consent. But, in a quasi-contract (as per the example given above), the parties to the dispute did not even know each other. So, there is no question of consent between them.