A quasi contract is not a contract at all in the true sense: no offer, no acceptance, no consensus ad idem. S.68 to S.72 impose obligations resembling contractual duties because the law refuses to let one party retain a benefit at another's expense without paying for it.
Legal Framework
| Section | Act | Scope |
|---|---|---|
| S.68 | Indian Contract Act, 1872 | Necessaries supplied to a person incapable of contracting, or to someone they are legally bound to support, recoverable from that person's property |
| S.69 | Indian Contract Act, 1872 | A person who is interested in the payment of money another is bound by law to pay, and who pays it, is entitled to reimbursement |
| S.70 | Indian Contract Act, 1872 | Where a person lawfully does something for another, or delivers something, not intending it as a gift, and the other enjoys the benefit, the latter must compensate |
| S.71 | Indian Contract Act, 1872 | A finder of goods belonging to another has the responsibilities of a bailee |
| S.72 | Indian Contract Act, 1872 | A person to whom money is paid, or a thing delivered, by mistake or under coercion, must repay or return it |
Why Quasi Contracts Exist
Why: The law of contract is built on genuine mutual assent, but situations arise where one party receives a real benefit from another, without any actual agreement, and simple justice demands compensation. Quasi contract fills this gap using the underlying principle against unjust enrichment: a person should not be allowed to retain a benefit obtained at another's expense without paying for it.
The Five Categories
1. Necessaries Supplied (S.68). Discussed in the context of minors and persons of unsound mind: necessaries supplied to a person incapable of contracting, or to someone the incapable person is legally bound to support, such as a dependent, are recoverable from the incapable person's property.
2. Payment by an Interested Person (S.69). If A pays a sum of money that B was legally bound to pay, and A had an interest in making that payment, A is entitled to reimbursement from B.
Why: The law recognises that a person protecting their own legitimate interest by discharging another's legal obligation should not simply lose that expenditure, provided they had genuine interest in doing so, distinguishing this from a stranger's officious intervention.
3. Liability for Non-Gratuitous Acts (S.70). Where a person lawfully does something for another, or delivers something to another, not intending to do so gratuitously, and the other person enjoys the benefit of that act or delivery, the person enjoying the benefit is bound to compensate, or to restore the thing delivered.
Why: If the recipient had the option to reject the benefit but chose to accept and enjoy it, fairness requires payment for what they knowingly retained.
4. Finder of Goods (S.71). A person who finds goods belonging to another and takes them into their custody is subject to the same responsibilities as a bailee, including reasonable care and the duty to attempt to locate the true owner.
5. Money Paid or Thing Delivered by Mistake or Under Coercion (S.72). A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.
Why: Retaining a benefit that was never actually intended to be conferred, due to error or unlawful pressure, would allow the recipient an unjust windfall unconnected to any genuine transaction.
Quantum Meruit as a Quasi-Contractual Remedy
Quantum meruit, literally "as much as is earned," allows a party who has performed part of an obligation, but is prevented from completing it (for instance, by the other party's breach, or where a contract is discovered to be void), to recover a reasonable sum for the work actually done, rather than nothing at all. This remedy operates on the same unjust enrichment logic underlying quasi contracts generally.
Illustrations
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Necessaries supplied (S.68): A shopkeeper supplies groceries to the family of a person who has been declared of unsound mind, essential for the family's sustenance. The shopkeeper can recover the value of these necessaries from the unsound person's property under S.68.
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Payment by interested person (S.69): A tenant pays property tax that the landlord was legally obligated to pay, in order to prevent the property from being attached by the municipal authority, since attachment would jeopardise the tenant's own occupancy. The tenant is entitled to reimbursement from the landlord under S.69.
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Non-gratuitous act (S.70): A paints B's house while B is away, under the mistaken but reasonable belief that B had commissioned the work, and B, upon returning, sees the completed work and makes no objection while continuing to use and enjoy the freshly painted house. B may be liable to compensate A under S.70, since B knowingly enjoyed the benefit of a non-gratuitous act.
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Money paid by mistake (S.72): A bank mistakenly credits Rs. 5 lakh to the wrong customer's account due to a clerical error. The customer, aware of the mistake, must return the amount under S.72, regardless of any argument that the bank should bear the consequence of its own error.
Recall Check
- Why does the law impose obligations under quasi contract despite the absence of any actual agreement between the parties?
- What must a person show under S.69 to claim reimbursement for paying another's legal obligation?
- Under S.70, what condition must be satisfied for the recipient to become liable to compensate?
Key Cases
Moses v. Macferlan (1760) Moses-v-Macferlan-1760 Issue: Whether a person who had paid money under a mistaken belief could recover it from the recipient, absent any actual contract between them. Rule: The law implies a promise to repay money received in circumstances where the recipient would otherwise be unjustly enriched at the payer's expense, independent of any real contractual relationship. Held: The plaintiff was entitled to recover, establishing the foundational common law basis for what Indian law later codified through the specific quasi-contractual provisions of S.68 to S.72.
Distinctions
| Basis | True Contract | Quasi Contract |
|---|---|---|
| Basis of obligation | Mutual agreement, offer and acceptance | Imposed by law to prevent unjust enrichment |
| Consent | Genuine consensus ad idem required | No actual consent between the parties |
| Governing provisions | S.10 and general contract principles | S.68 to S.72 specifically |
| Example | Sale agreement freely negotiated | Recovery of money paid by mistake under S.72 |
Flashcards
Q: What is the underlying principle justifying quasi-contractual obligations? A: Prevention of unjust enrichment, where one party retains a benefit at another's expense without paying for it.
Q: Under S.69, what condition must the payer satisfy to claim reimbursement? A: The payer must have been interested in making the payment of a sum the other party was legally bound to pay.
Q: Under S.70, what must the recipient have done to become liable to compensate? A: Knowingly enjoyed the benefit of a lawful, non-gratuitous act or delivery made by another.
Q: What duties does S.71 impose on a finder of goods? A: The same responsibilities as a bailee, including reasonable care and efforts to locate the true owner.
Q: Under S.72, must money paid by mistake be returned even if the payer's own error caused the mistake? A: Yes, S.72 requires repayment regardless of whose error caused the mistaken payment.
Exam Scenario
A construction firm begins renovation work on what it believes is B's property, based on an address error in its work order, while B is travelling abroad. B returns after the work is substantially complete, inspects the renovated property, and continues living in it without raising any objection or informing the firm of the mistake for several months. The firm later discovers its error and demands payment from B. Advise B on his liability.
Approach: Apply S.70 to assess whether B's continued occupation and enjoyment of the renovated property, after having a reasonable opportunity to object or reject the benefit, amounts to knowing enjoyment of a non-gratuitous act. Since B did not intend the work as a gift he was owed, and B's prolonged silence and continued use suggest acceptance of the benefit rather than rejection, conclude that B is likely liable to compensate the firm under S.70, notwithstanding the absence of any actual contract between the parties, since B's conduct in retaining the benefit without objection triggers the quasi-contractual obligation.
See Also
- CON1-4.2 Remedies for Breach of Contract : the distinct remedy of quantum meruit, grounded in the same unjust enrichment logic as quasi contract generally.