Quasi Contracts - Business Law

QUASI CONTRACTS

Group 9

Abhishek Dwivedi PGPM508_09

Ajit Kumar PGPM508_20

Gautam Pradhan PGPM508_32

Gagan Seth PGPM508_44

Chandra M Verma PGPM508_56

What Are Quasi Contracts

‘Quasi’ means ‘almost’ or ‘apparently but not really’ or ‘as if it were’

A quasi contract is a contract that exists by order of a court, not by agreement of the parties

Courts create quasi contracts to avoid the unjust enrichment of a party in a dispute over payment for a good or service

Sections 68 to 72 deals with "certain relations resembling those created by contract" under Indian contract act, 1872

Illustration A victim slips on a banana leaf and falls down a flight stairs

Doctor a stranger who happened to be walking by , administers emergency treatment to unconscious victim

Doctor does not enter into a contract with victim

Doctor could now recover fee for her services on the theory of unjust enrichment

This is where “Quasi-contract” come into play. The court in this case creates a fictional contract to grant benefits to the doctor

Sections In LawThe sections in law which cover the Quasi Contracts are

Supply of necessaries (section 68)

Payment of lawful dues by interested person (section 69)

Person enjoying benefit of a gratuitous act (section 70)

Finder of goods (section 71)

Goods or anything delivered by mistake or coercion (section 72)

Quasi ContractContracts results from the will of the parties expressed with a view to create an obligation

Quasi Contract is not a contract at all but merely a legal fiction.

It cannot be used when full-fledged contract exists

Contract is an agreement There is no agreement

It has certain essential elements Essentials for formation of a contract are absent

It is a full fledged contract and is binding

It is not a full fledged contract

Contract

Differences…

Section 68“Claim for supply of necessaries to person incapable of contracting”

Necessaries:

Things suited to the conditions of incompetent parties

Includes articles required to maintain a particular person in the state and degree in the life in which he is

Articles without which an individual cannot reasonable exist

Illustration A supplies B, lunatic with necessaries suitable to his condition of life. is

entitled to be reimbursed from B’s property

A minor studying at Cambridge was supplied with clothing, including eleven waist-wats. He already had sufficient clothing with him. It was held that the waist-wats were not necessary articles and so he was not liable to pay for them.

Section 69“Reimbursement of money paid, in which he is interested”

Essentials:

There must be a person who is bound to make a payment by law. The person paying must himself not be bound to pay. When he is jointly liable to pay, payment by him would not give him the right to recover under this section

There must be another person interested, not bound by law, in such payment being made and interest should exist at the time of payment.

The payment must be made bonafide for the protection of one’s own interest

IllustrationA and B have been fined jointly Rs500 for selling adulterated ghee. A alone pays the amount of fine in good faith, A cannot later claim contribution from B under Section 69. Notice that although B was bound by law to pay and A has paid B’s share in good faith, yet A cannot recover as he himself was bound to make the payment, being jointly liable with B and was not simply interested in making the payment. [A can, however, claim contribution form B under Section 43.]

Section 70“Obligation of a person enjoying benefits of non-gratuitous act”

Person lawfully does anything for another person

Delivers anything to him non-gratuitously

Latter is bound to make compensation or restore the thing so done or delivered

The thing must be done lawfully

The person for whom the act is done must enjoy the benefit of it.

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

A saves B’s property from fire. A is not entitled to compensation from B, if the circumstances show that he intended to act gratuitously.

Illustration

Section 71 - Responsibility of finder of 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”

H picked up a diamond on the floor of F’s shop and handed it over to F to keep it till the owner appeared

True owner could not be searched

After the lapse of some weeks, H tendered to F the lawful expenses incurred by him for finding the true owner and an indemnity bond and requested him to return the diamond to him (i.e., H). F refused to do so

F must return the diamond to H as he was entitled to retain the goods as against everybody except the true owner (Hollins Vs FowlerS)

Illustration

1. Duties of Finder of Goods:• He must try to find out “the real owner” of the goods and must not appropriate the

property to his own use ( Section 403 IPC )• He must take as much care of the goods as much a man of ordinary prudence

would take of his own goods of same bulk, quality and value. (Sec 151 )

2. Rights of finder of Goods:• He is entitled to the possession of the goods till the true owner is found.

( Case : Hollins vs FowlerS)• He is entitled to retain this good until he receives the lawful charges or

compensation for retaining the goods and for care and preservation thereof. However, he cant sue for such compensation unless a specified reward has been advertised by the owner.

• He can sell the goods if: • The commodity is perishable • The owner cannot be found • Owner refuses to pay the lawful charges• Lawful charges amount to 2/3rd of the value of commodity found

Section 71 - Responsibility of finder of goods

Section 72 - delivered by mistake or coercion“Liability of person to whom money is paid, or thing delivered by

mistake or under coercion”

What does it mean…

A person to whom money has been paid, or anything delivered by mistake or under

A and B jointly owe Rs. 1,000 to C. A alone pays the amount to C and B not knowing this fact, pays Rs. 1,000 over again to C. C is bound to repay the amount to B.

A railway company refuses to deliver certain goods to the consignee except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive.

Illustration

Quasi Contracts - Business Law

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