Definition: Quasi Contract is a retroactive agreement, determined by a judge with an aim of correcting a situation wherein one party obtains something at the cost of another party. It stops one party from getting an unfair advantage from the situation. It takes place when a dispute exists against the payment of goods and services.
Thus such arrangements rely on the court’s order when no prior agreement exists between the parties concerned. Also, it does not possess all the elements of a valid contract i.e. offer and acceptance, legal enforceability, capacity to contract, consideration, and free consent. In simple words, a quasi-contract is a contract that where one or more elements of a valid contract are absent.
It is based on the principle of equity, justice, and good conscience that says – No one is permitted to be unjustly wealthy when the other person is spending.
In a quasi-contract, the law assumes a promise that enforces obligations on one party and confers right in favor of the other. So, these are not actually contracts but the Court of law perceives them as relations similar to the contracts and effectuates them as if they are contracts.
Examples of Quasi Contract
- Mr. Shah ordered a dress online for his wife, as a birthday present. The delivery boy mistakenly delivered the dress to the lady in their neighborhood, and the neighbor used the dress thinking that it was ordered by her brother. In this case, the lady is bound to return the parcel to Mr. Shah or pay the price for that dress.
- Sameer went to his friend’s home for group studies and forgot his mobile there, which is found out by his friend’s brother. So, it is the duty of his friend’s brother to return the phone to Sameer.
Salient Features of Quasi Contract
- It is an obligation enforced by law upon the party for the benefit of another party, even when there is no contract between the two.
- Outcome of such obligations is similar to those resulted out of a regular contract.
- Such contracts do not arise from an agreement, rather they are imposed by law.
- The foundation of a quasi-contract is the duty of a party and not the promise of the party.
- Right under such contract at all times is the right to the money and in most cases, but not every time, to a liquidated sum of money.
- Right is entitled to the party against the specific person only and not against the entire world.
- The party may file a suit for breach using the same process as in the case of an ordinary contract.
Cases Deemed as Quasi Contract
Claims for necessaries supplied to an incompetent person
When a person lacks the capacity to contract, i.e. person of unsound mind or a minor or anyone who is dependent on that incompetent person, the person who has supplied necessaries to that person is entitled to recover the same from the property of such person and if the incapable person does not own any property nothing is payable.
Payment by an interested person
In case payment of money is made by an interested person on behalf of another person, who is legally bound to pay, then the interested person is entitled to reimburse the amount paid from the person, who was originally liable for the payment.
Duty of a party enjoying the benefit of a non-gratuitous act
Any act is non-gratuitous, which is not performed free of charge. If a person lawfully performs an act for another person or delivers anything, having no intention to do it gratuitously, i.e. free of charge and the other party gets the benefit of it, then the latter is obligated to compensate for the same or restore what is performed or delivered. And so, the plaintiff is required to prove:
- That there is the lawful performance of the act or delivery of the thing in question.
- That the plaintiff has not done or delivered anything gratuitously, i.e. free of charge.
- That the defendant has enjoyed the benefits arising out of the act or thing.
Finder of goods
When a person finds goods that are someone else’s property and keeps the same in his custody, has the same responsibility, as that of a bailee, in a contract of bailment. So, it is the duty of the finder of the goods to find the actual owner and return the goods.
Responsibilities of the finder of goods:
- He has to take good care of the property, as the normal person would take.
- He is not allowed to appropriate the goods and
- He must restore the goods whenever the owner is found.
The finder of the goods can recover the expenses incurred on storing and maintaining the goods belonging to the owner.
Money paid by mistake or coercion
When money is paid by any party either by mistake or under coercion, the party who has received the money must return or restore it. Here, the word coercion is not covered under section 15, however, it means and includes money obtained by way of extortion or oppression.
A Word from Business Jargons
The term ‘Quasi Contract’ means the ones that resemble a contract and they give rise to legal obligations as a regular contract does. However, they are entered into without any enforceable agreement. Also, there is no intention of the parties, to enter into a contract.