QUASI-CONTRACT; THE FICTIONAL CONTRACT

Abstract

The quasi contract is an obligation, which the law creates in the absence of the agreement. It can
be described as, “certain contracts resembling those created by the contract”. It is based on the
maxim, “nomo debet locuplatari ex liena justua.” Literally means, “as much as earned” or “as
much as merited”. The right to claim quantum merit does not arise out of control as the right
damages does, it is a claim on quasi contractional obligation which the law implies in
circumstances. It is also consider as a substitute which is legal formed to impose equity between
the two contracting parties. It is used when a court finds it appropriate to create an obligation
upon a non-contracting party to ensure fairness and to avoid injustice. The court in this case
creates a fictional contract to grant benefits to the doctor.
According to the law of contracts, the main essentiality is consent of the contracting parties
produces the obligation to fulfill the terms of the contract. Such acts are therefore called quasi-
contracts because without acquiring the status of a contract, they tie the parties as contracts do.
Sections 68 to 72 deals with “certain relations resembling those created by contract” under
Indian contract act, 1872. Therefore a quasi-contract is not really a contract at all in the normal
meaning of a contract, but rather it is an obligation imposed on a party to make things fair.
This project deals with the detail explanation of quasi contracts, presented in chapterisation
format. The project starts with the chapter 1, under which introduction, research methodology
and literature review are dealt with. The chapter 2, consists the principles of the quasi-contracts.
Whereas , the chapter 3 deals with the essential elements for the quasi contract. The chapter 4
deals with the provisions of the quasi – contracts. And the last, the chapter 5 deals with the
explanation of cases relevant to quasi contracts and ends with conclusion part along with the
references.
 TABLE OF CONTENTS

 CHAPTER 1
- Introduction.
- Research methodology.

 CHAPTER 2
- Principles of quasi-contracts.

 CHAPTER 3
- Difference between contracts and quasi-contracts.

 CHAPTER 4
- Provision of quasi-contracts.

 CHAPTER 5
- Conclusion.
- Bibliography.
 Chapter 1

Introduction:

An obligation that the law creates in the absence of an agreement between parties. It is
invoked by the courts where unjust enrichment, which occurs when a person retains money or
benefits that in all fairness belong to another, would exist without judicial relief. A contract
could be a contract that exists by order of a court, not by agreement of the parties. Courts
produce similar contracts to avoid the unjust enrichment of a party in a dispute over payment for
an honest or service. In some cases a party who has suffered a loss in an exceedingly business
relationship might not be ready to recover for the loss while not proof of a contract or some
lawfully recognized agreement. To avoid this unjust result, courts produce a fictitious agreement
where lawfully enforceable exists. This research paper consists of five chapters which are dealt
with detail explanation of quasi-contracts and its provisions under Indian Contract Act from
section 68 to section 72, and also shown that how much quasi contracts stands an important place
in equity and justice with quantum meruit. Quantum meruit is a principle where a party has in the
performance of his contract rendered some service and further service is made useless by the
other party , then he can claim compensation through this principle.

Research methodology:
In this research paper, quasi-contracts has been explained in detail starting from principles to
provisions under the contract. In this research paper the main sources are books and online
information and articles. Books like contract and specific relief by ‘Avatar Singh’, contracts 1 by
‘R.K.Bangia’ and Indian Contracts Act by ‘mulla’. And online sources like SCC online, India
kannon, etc. has been used. Under each provision related cases are explained briefly. Thus at the
end it will be clear that why quasi contracts are called fictional contracts.
 CHAPTER 2

PRINCIPLES OF QUASI CONTRACTS:

In quasi-contracts there are specific contractual principles, they are ;

1) The theory of unjust enrichment.

2) The theory of “implied –in-fact” contract.

3) Restoration of theory of unjust enrichment.

The idea of unjust enrichment:

This ‘doctrine of unjust enrichment’ that declares that an individual shall not be allowed
to enrich himself unjustly at the expense of another. it should be noted that suit for damages or
the breach of the contract may be filed within the case of a quasi-contract within the same
method as within the case of a completed contract. The principle of unjust enrichment requires:

• The defendant has been ‘enriched’ by the receipt of a profit

• This enrichment is at the expense of the plaintiff

• The retention of unjust of the enrichment is unjust.

The theory of “ implied-in-fact contract”:

According to this principle if an individual promise to pay back an ultra vires loan, it may
be attributed to the person as quasi-contractual obligation , the result would be to upheld a
transaction that has been declared to be void on the ground of public policy and also the law
would be implementing a notional contract wherever an express contract would are void. This
judgment over dominated the opposite decisions for lasting and also the call were created
therefore to possess settled that juridical basis of quasi-contracts was the inexplicit, notional or
fictional contract. Wherever the circumstances of a case don't result in an inference of this type
or wherever such an inference would be against the law, no liability can arise.

The restoration of unjust enrichment:

The implied contracts really restricted the scope of relief which might are done doable
with none such hindrance of “natural justice and equality”. Later within the case of Sinclair v
brougham it absolutely was observed that it turned the principle out that was against public
policy to permit the recovery of the ultra-varies deposit, whether or not the claim or sue may be
in contract or quasi-contract. Lordships conclude once observation that quasi-contracts were just
out of obiter dicta. so during this case the lords adopted at an equal rate distribution of obtainable
assets so as to prevent the unjust enrichment of the shareholders at the cost of the depositors.
 CHAPTER 3

Difference between contract and quasi-contract:

Contract:

 A contract is a contract between two parties. In contract, always there is an agreement

between the parties.
 In contract, always there is an agreement between the parties.
 In contract, the parties must give their consent to it.
 In contract, the liability exists between the parties by the terms of the parties.
 It is created by the operation of the contract.
 It is right in rem, and also right in personam.
 2(h) of the Indian contract act, 1872, defines contract: “an agreement enforceable by law
is a contract”.
 The word “contract” is divided from the Latin “contractum” which gives meaning “drawn
together” or “consensus ad idem(identity of minds)”. Thus the meaning of “contract is a
drawing together of two or more minds to form a common intention giving rise to an
agreement”.
 ESSENTIALS:

1) Free consent
2) The parties must be competent
3) There must be lawful consideration and lawful object
4) The agreement must not expressly be declared to be void
5) If the law in force requires, it must be registered.
QUASI-CONTRACT:

 A Quasi-contract is not a real contract. Quasi contracts are also known as “constructive
contracts” or “certain relations resembling those created by contracts”.
 Where as in quasi-contract, there is no agreement between the parties.
 In quasi-contract, the parties do not consent.
 In quasi-contract, the liability exists independent of the agreement and rests upon equity,
justice and good conscience.
 It is imposed by law. It is not created by the operation of the contract.
 It is right in personam which means, Strictly available against the entire world.
 Salmond defines quasi-contracts: “there are certain obligations which are not in the truth
contractual in the sense of resting on agreement, but which the law treats as if they were”.
 Lord Mansfield explained that law as well as justice should try to prevent “unjust
enrichment”. That is, enrichment of one person at the cost of another. He explains: “it is
clear that any civilized system of law is bound to provide remedies for cases of what has
been called unjust enrichment or unjust benefit, that is to prevent a man from retaining
the money of, or some benefit derived from, another which it is against conscience that
he should keep. Such remedies in contract or tort, and are now recognized to fall within a
third category of the common law which has been termed as quasi-contract or
restitution”.
 ESSENTIALS:
1) It is imposed by law. It is not created by contract.
2) It is a right in personam
3) The person who incurs expenses is entitled to receive money
4) It is raised by a legal fiction
 CHAPTER 4
PROVISIONS OF INDIAN CONTRACT ACT:

Chapter V of the Indian Contract Act helps in sorting out of few critical circumstances that
comes under “Of certain relations resembling those created by contract”. This chapter omits the
word “quasi-contract”, and in the view of statutory authorization the courts doesn’t cause
difficulties to anyone in allowing relief under different sections of this act.

1) Section 68.
-Supply of necessaries to persons who are incompetent to contract.

2) Section 69.
-Payment by the interested person.

3) Section 70.
-Non-Gratuitous acts.

4) Section 71.
-Finder of goods.

5) Section 72.
-Payment of money or deliver of goods by mistake or under coercion.

SECTION 68:

Claim of necessaries supplied to person incapable to contract.

When necessaries of life are provided to a party who isn't competent to create a contract with or
to party whom he's de jure bound to support is entitled to say the price from the opposite
person’s property.

Illustration:

If A provides B, a lunatic , with necessaries appropriate to his condition in life. Then the A is
entitled to claim from B’s property.
SECTION 69:

Reimbursement of person paying money due by another, in payment of which he is

interested.

A person who has paid a sum of money which another is obliged to pay, is entitled to be
reimbursed by that another person provided the payment has been made by him to protect his
own interest. Here the person who makes the payment must honesty believe that his own
interests demands payment.

Illustration:

Conditions of liability:

 Firstly the plaintiff should be interested in paying money under which the interest should
be protected when it is legally recognizable.
 Secondly, it is necessary that the plaintiff is not bound to pay, but he is paying in order to
protect his own interest.
 Thirdly, the defendant at the suit of any person might be compelled or bound to pay.

CASE LAW:

Govindram vs. Gondal state, AIR 1950 PC 99.

The general purpose of this section is to afford to person who pays money in furtherance of some
existing interest an indemnity in respect of the payment against any other person who, rather
than he, could have been made liable at law to make the payment.

The expression “bound by law” covers obligations of contract or tort an is not confined to those
public duties which are imposed by statute or general law.

A contracted to sell certain property to B. C sub-purchased it from B. A repudiated his obligation

under section 55 of the Transfer of Property Act to pay off the outstanding municipal taxes. To
prevent a forced sale of the purchased property in realization of the municipality’s charge, C
made the payment. B and C together brought suit against A for re-imbursement it was held that

1) That although B’s sub-sale did not assign or contract to assign his contractual obligations
under his agreement with A. A could not be absolved from liability merely because B had
not gone through the procedure of paying over to C unless C could obtain indemnity from
A.
2) That, section 69 applied to the payment made by C. C was interested in the payment and
the payment was not voluntary. Thus, as against A , both B and C were entitled to obtain
re-imbursement of the money so paid.
SECTION 70:

Obligation of person enjoying the benefits of Non-Gratuitous Act.

When a person de jure anything for another person or delivers anything for him not intending to
do so gratuitously and such other enjoys the benefit there of , the latter is bound to pay
compensation to the former in respect of, or to restore, the thing so done or delivered.

Illustration:

A, tradesman leaves goods in B’s house by mistake. B treats the goods as his own. He is bound
to pay A for them.

Conditions of liability:

1) The person should do something lawfully for another person or deliver something
lawfully1.
2) The act of delivering the said thing or doing the said thing must not be intended to act
gratuitously.
3) The person who received the benefit by another person or got something delivered by
other person then they must enjoy the benefit thereof.

In the case, W.B v. B.K. Mondal &sons, the conditions on which the liability under the section
arised.

CASE LAW:

Neha bhasin v anand raaj anand,(2006) 132 DLT 196

In this case the plaintiff was a singer and singing for the firm of defendants, during the recording
of her songs she did not behave gratuitously thus the firm didn’t enter into an contract with her or
start a business with her. But they made cassettes and CDs of her song recordings and earned
money by selling those cassettes without her permission. Since there was no formal contract, the
court said that a quasi-contract arose under section 70 making the defendants liable to pay for her
services.

1
Raghavan valamelu ammal,ILR(1907)31 mad 35
SECTION 71:

Responsibility of finder goods.

A person, who finds goods belonging to another and takes them into his custody, is subject to the
same responsibility as a bailee. The finder’s position, therefore, has been considered along with
bailment. The finders of the goods are considering as the bailee, and the person who lost the
goods are considered as a bailer.

Illustration:

If a person A lost his goods and person B finds it and uses it, then he should be responsible for
the goods he found.

CASE LAW:

Union of India v Amar Singh2

In this case, a railway authority which took into its custody wagons which had plaintiff’s goods
in it, which he left in the border of Pakistan became the contractual bailee of the goods. Thus he
is held responsible for the goods.

SECTION 72:

Delivered by mistake or coercion.

A person to whom money has been paid, or anything delivered , by mistake or under coercion
,must repay or return it3.

Illustration:

If A and B jointly owes 100 rupees to C. Now only A pays the 100 rupees to C without knowing
this fact , B also pays 100 rupees to C. Now C is responsible to pay the money back to B.

CASE LAW:

Food corporation of India v k.venkateshwara,(1988) LT 930.

In this case where the rice millers were paid an amount in excess of the agreed rate because of a
mistake in classification according to quality, they were required to disgorge the unjust
enrichment.

CHAPTER 5
2
AIR 1960 SC 233: (1960) 2 SCR 75.
3
Jadish prosed pannalal v produce exchange corpn ltd,ILR (1945)2 CAL 245
Conclusion:

In this research paper it's been clearly shown that contracts and similar contracts are
totally different. Contracts however are obligations that the law imposes upon somebody to
prevent undue advantage to one person at the value of another. The Indian Contract Act, 1872
covers these kinds of obligations underneath the Chapter V under the title ‘OF CERTAIN
RELATIONS RESEMBLING THOSE CREATED BY CONTRACT’ however the act doesn't
embody the term ‘quasi contract’. It may be as a result of the explanations that the act also
desires to inform that these style of obligations are so much totally different from real contracts
and that they should not be referred to as similar contracts. It's the law that compels parties UN
agency get unduly privileged to compensate the opposite party on the principle of equitable
justice. The foundation of similar contracts relies on the principles of Equity, Justice and good
Conscience, which requires that no-one shall profit himself unjustly, at the value of others. This
is often called the Principle of Unjust Enrichment. The premise of contract is that triviality of
contract cannot override the wants of justice. Once one thing has been in serious trouble the
advantage of another person without the waiting for his formal assent as also for the completion
of other formalities, it's expected that the person receiving the profit should compensate the
opposite party for the difficulty and expenses incurred. Thus it is also called as fictional
contracts.

BIBLIOGRAPHY:
ONLINE SOURCES:

 https://www.lawctopus.com/academike/contracts-and-quasi-contracts/
 http://shodhganga.inflibnet.ac.in/bitstream/10603/132512/9/09_chapter%202.pdf
 https://study.com/academy/lesson/quasi-contract-definition-examples.html

BOOKS REFERRED:

 Contract and specific relief by Avatar Singh

 Contract1 by R.K.Bangia
 Indian Contracts Act,1872 by Mulla