Quasi Contracts under the Indian Contract Act, 1872

Updated: Sep 13, 2021

The concept of Quasi-contracts is inspired by the theory of Unjust Enrichment. These agreements resembling relations similar to a contract are based on the principle of Nemo debet locupletari ex aliena jactura, which basically implies that one person should not get rich or gain, at the expense of someone else's loss.


In various circumstances discussed below, a person is obliged to compensate another although the basis of this obligation is neither a contract between the parties nor any tort on the other party, who is bound to compensate.


MEANING OF QUASI-CONTRACT


Quasi-contracts are certain relations “resembling those created by contract.” It is covered in Chapter V (Section 68-72) of the Indian Contract Act, 1872.

Quasi Contracts under the Indian Contract Act, 1872

In this circumstance, an individual is obliged to compensate another although the basis of this obligation isn't an agreement between the parties.


The basis of this obligation is that one should have an unjust benefit at the cost of another.


The following are the essentials of Quasi-Contract:-


  1. The benefit has been received by the defendant.

  2. The benefit is at the expense of the plaintiff.

  3. The benefit received is unjust.


DIFFERENT TYPES OF QUASI-CONTRACTUAL OBLIGATIONS-


The Chapter V of the Indian Contract Act, 1872 discusses 5 categories or types of such obligations. These obligations are not originated in the proposal or acceptance of any agreement, but rather are based on the principles of justice, equity, and good conscience, and natural justice, viewed through the perspective of the Theory of Unjust Enrichment.


1. Claim for necessaries supplied to a person incompetent to contract under Section 68:

Quasi Contracts under the Indian Contract Act, 1872

When one person supplies necessaries to another person who is incompetent to contract, or to anyone whom such incompetent person is legally bound to support, and the person furnishing such supplies is entitled to reimbursement from the property of such incompetent.


It is already known, that any contract with a minor, lunatic or incompetent person is void ab initio. The person who is legally required to be reimbursed cannot bring a suit against such an incompetent person.

However, reimbursement can be claimed only through the property of such a person.


For instance- a minor or lunatic or to anyone whom such incompetent person is bound to support (for example- a lunatic, wife or children) the person furnishing the supplies is entitled to reimbursement from such incompetent person’s property.


Illustration:

(a) A supplies B, a lunatic with necessities suitable to his condition in life. A is entitled to be reimbursed from B’s property.

(b) A supplies the wife and children of B, with necessaries suitable to their condition in life. A is entitled to be reimbursed from B’s property.


2. Reimbursement of Money paid, due to another under Section 69 :

Quasi Contracts under the Indian Contract Act, 1872

An individual who is interested in the payment of money, which another is limited by law to pay and who consequently pays it, is qualified for reimbursement by the other.


For the application of this Section, the following two essentials need to be satisfied:





(i) One person is interested in the payment of money therefore he pays it-


In Brook’s Wharf v. Goodman Brother’s, the defendant’s warehoused certain goods, which they had imported from Russia, with the plaintiffs. The goods were stolen. Under the (circumstance) law of customs, duty on the goods could either be recovered, from the owners of the goods from the warehouseman.


The warehouseman i.e. plaintiffs were called upon to pay the customs duty which the owners of the goods i.e. defendants were bound to pay. The plaintiffs claimed the amount of duty paid by them from the defendants. It was held that they were entitled to recover the same.


(ii) Another person is bound by law to pay the same, but he fails to pay-


In Port Trust, Madras v. Bombay Company, an employee of the Port Trust was injured and was compensated under the Workmen's Compensation Act. After the payment of compensation, the plaintiffs brought an action against the defendants, due to whose fault the injury was caused. This action could have been maintained under the tort of negligence by the defendant.


But the Courts dismissed the claim for reimbursement under Section 69 of the Contract Act because of the following reasons-

  • The plaintiff was not merely interested in the payment, as the injured worker had already been compensated.