By Tania Maria Joy
Introduction
An agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law. A contract is an agreement enforceable by law. Contracts are promises that the law will enforce. The law provides remedies if a promise is breached or recognizes the performance of a promise as a duty. Contracts arise when a duty does or may come into existence, because of a promise made by one of the parties. To be legally binding as a contract, a promise must be exchanged for adequate consideration.
Adequate consideration is a benefit or detriment which a party receives which reasonably and fairly induces them to make the promise/contract. For example, promises that are purely gifts are not considered enforceable because the personal satisfaction the grantor of the promise may receive from the act of giving is normally not considered adequate consideration. Certain promises that are not considered contracts may, in limited circumstances, be enforced if one party has relied to his detriment on the assurances of the other party.
A contract means an agreement that is enforceable by law. An agreement consists of reciprocal promises between the two parties. In the case of a contract, both the parties are legally bound by the promise made by him. A contract to perform a promise could arise in these ways: by agreement and contract, standard form contracts, and promissory estoppel.
Quasi contract
English Law identified quasi-contractual obligations first, the framers of the Indian Contract Act modified it and placed it in the Act as “certain relations resembling those created by contracts”. Therefore the elements that are present in the English Quasi-contract are also found in that of the Indian Contract Act.
Though the Indian Contract Act, 1872 does not define a quasi-contract, it calls them relation resembling those of contracts. However, a quasi-contract may be defined as, “a transaction in which there is no contract between the parties; the law creates certain rights and obligations between them which are similar to those created by a contract.
“An obligation created by law for the sake of justice; specif., an obligation imposed by law on parties because of a relationship between parties or because one of them would otherwise be unjustly enriched. It’s not a contract, but instead is a remedy that allows the plaintiff to recover a benefit conferred on the defendant. These types of contracts are quasi-contract or restitution that fall in the third category of quasi-contracts or restitution.
The procedural term ‘quantum merit has persisted and is sometimes used as a synonym for the more general term ‘ quasi-contract’ which refers to any money claim for the redress of unjust enrichment, in other words, a contract made by law for reasons of equity with no statement of consent is a quasi-contract. Quasi-contracts bring a situation that imposes obligations or duties upon the parties by law rather than the assent given by them to the contract terms.
There are many situations in which law, as well as justice, requires that a certain person is required to confirm an obligation, although he has not broken any contract nor committed any tort. For example for Quasi Contract would be worthy of Quoting for the better understanding of Quasi Contract, if a person in whose home certain goods have been left by mistake is bound to restore them.
This shows that a person cannot entertain unjust benefits at the cost of some other person. Such kind of obligations is generally described, for the want of a better or more appropriate name, as Quasi-Contractual Obligations. This would be better to explain up that a Quasi-contract consists of the Contractual Obligation which is entered upon not because the parties have consented to it but because the law does not allow a person to have an unjustified benefit at the cost of another party.
These are not contracts but these fictional agreements arise to ensure equity as it would be unfair if a party gets an undue advantage at the cost of others. The liability exists in quasi-contracts based on the basis of the doctrine of unjust enrichment. Take for example a person in whose house certain goods have been left incidentally, so that person is bound to restore them. There will be an obligation on the house owner to restore the goods safely that is imposed by law rather than any agreement between the parties. Such a type of contractual obligation is termed quasi-contractual obligations. Basic elements of quasi-contracts are:
Liability
In general, the quasi-contract doctrine is applied in disputes regarding the case of the latter, even though there is no contract between the parties as per the facts, the actions and words of the parties amount to mutual consent over the disputed matter. The difference between the two can be illustrated with an example.
A approaches a doctor for treatment. Here, there is mutual consent between A and the doctor. As A expects treatment from the doctor, the doctor expects payment from A for his services. This is an example of an implied-in-fact contract, wherein the conduct of the parties suggested mutual consent. But, in a quasi-contract (as per the example given above), the parties to the dispute did not even know each other. So, there is no question of consent between them.
Theories Behind Quasi Contracts
So far as there was not an established rule of Quasi Contractual obligation the English Lawyers were content to enumerate the cases of the Quasi Contract for which they are provided with on a remedy as to many species of “Indebitatus Assumpsit (A form of action in which the plaintiff alleges that the defendant has undertaken a debt and has failed to satisfy it.), but they evaded the odious task of rationalization. But as soon as the urge was felt to explore their juristic basis, the controversy was born.
The “quasi-contract” is covered in Chapter V of the Indian Contract Act, 1872, under the heading of ‘of certain relations and resembling those created by contract’. I feel that the Indian contract act, 1872 favours the term ‘quasi-contract’ but partially as it is not a real contract because if they would have been in support of this term, then they would have included this term in Chapter V of the act rather than giving the heading ‘Certain Relations resembling those created by Contract’ but they mean by this title that they are referring to quasi-contracts.
The term ‘quasi-contract’ is avoided in the chapter but this chapter is about the doctrine of quasi-contracts. Nothing is precisely clear about the quasi-contracts. The founder of quasi-contract based on the theory of unjust enrichment was Lord MANSFIELD who explained such obligations based upon the law as well as justice to prevent undue advantage to one person at the cost of another.
The concept was first taken up in the case Moses v. Macferlan. The facts of the case are as such: Jacob issued four promissory notes to Moses and Moses indorsed them to Macferlan, excluding by a written agreement, his personal these two and that is ‘quasi-contract or restitution. It was also observed that the precious theory was against public policy and ultra vires to the law.
The principle of unjust enrichment requires: first, that the defendant has been ‘enriched’ by the receipt of a “benefit”; secondly, that this enrichment is “at the expense of the plaintiff”; and thirdly, that the retention of the enrichment is unjust.
Position In Indian Law
Chapter V of the Indian contract Act, 1872 deals with the “certain relations resembling those created by contract”. It incorporates those obligations which are known as “Quasi Contracts” under English law. 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 part of the person who is bound to compensate. The basis of the obligation is that no one should have the unjust benefit at the cost of the other. If A gets unjust enrichment at the cost of B, A has an obligation to compensate B for the same. For instance, A and B jointly owe 100 rupees to C. A alone pays the amount to C and B, not knowing this fact, pays 100 rupees over again to C. C is bound to repay the amount to B.
In an action for unjust enrichment, the following essentials have to be proved:
- The defendant has been “enriched” by the receipt of a “benefit”.
- The enrichment is “at the expense of the plaintiff”.
- The retention of the enrichment is “unjust”.
Similarities Between Quasi Contracts And Contracts
The result of the contract and quasi-contract is similar to that of contracts. So far as the claim for damages is concerned they are very similar to that of contracts because Section 73 of the Indian Contract Act, 1872 provides remedies for the breach of quasi-contracts as provided for the breach of express contracts in various sections of the Indian Contract Act, 1872. Remedies are available under quasi-contract under the Indian contract act, 1872.
Distinction Between Quasi Contracts And Contracts
A “quasi” or constructive contract is an implication of law. An “implied” contract is an implication of fact. In the former, the contract is a mere fiction, imposed to adapt the case to a given remedy. In the latter, the contract is a fact legitimately inferred. In one the intention is disregarded; in the other, it is ascertained and enforced. In one, the duty defines the contract; in the other, the contract defines the duty.
Any contract has two essential features i.e. agreement and obligation. The agreement arises when a party puts forwards a proposal and when that proposal is accepted by the other party. Obligation comes into the picture as the law imposes it over the parties but is linked to the agreement between the parties. Therefore, a contract is a legally enforceable agreement.
Contracts are express or implied by law. The former comes into the picture by the conduct or words or negotiations between the parties. The contract implied by law is not a real contract. It would be unfair to term it a contract. It arises when law irrespective of agreement aims at meeting the ends of justice. A distinction is outlined in Keener on these types of contracts. The learned author says that:
He says that the quasi-contracts are based on the conduct of the parties. It seems to be unfair that the law implying a promise on someone whose declarations disprove any intention but still this practice is in functioning.
The express contracts are approved by parties as a matter of law both sharing equal interests with equal consequences though the conditions are stated expressly while in the case of quasi-contracts the law imposes obligations taking into view the conduct of the parties to a mistake is not to the doer when the benefit is incurred, the obligation is quasi-contractual. The concept of such types of contracts has been in existence upon the principles of honesty, justice and fairness.
The most fundamental principle to make quasi-contract come into existence is upon the principle of justice to ensure no one ought to have unjustly enriched himself at the expense of another. In Mahabir Kishore v. State Of Madhya Pradesh, the requirements of the principle of unjust enrichment were laid down by the Hon’ble Supreme Court as follows:
- The defendant has been ‘enriched’ by the receipt of a benefit.
- This enrichment is at the expense of the plaintiff
- And the retention of unjust enrichment is unjust.
It is proved by the research that contracts and quasi-contracts and contracts are far different. They are not contracts but are obligations that the law imposes upon someone to prevent undue advantage to one person at the cost of another. The Indian Contract Act, 1872 covers these types of obligations under Chapter V under the title ‘OF CERTAIN RELATIONS RESEMBLING THOSE CREATED BY CONTRACT’ but the Act does not include the term ‘quasi-contract’.
It could be because of the reasons that the act also wants to tell that these types of obligations are far different from real contracts and they must not be called quasi-contracts. It is the law that compels parties who get unduly advantaged to compensate the other party on the principle of equitable justice. The foundation of quasi-contracts is based on the principles of Equity, Justice and Good Conscience, which requires that nobody shall benefit himself unjustly, at the cost of others. This is known as the Principle of Unjust Enrichment.
The basis of the quasi-contract is that technicality of contract cannot override the requirements of justice. When something has been done for the benefit of another person without waiting for his formal assent as also for the completion of other formalities, it is expected that the person receiving the benefit must compensate the other party for the trouble and expenses incurred.
The contract and quasi-contract can be distinguished by focusing on the concept of agreements and obligations by and the parties respectively. The unjust principle came from the old maxim of Roman law ‘Nemo debet locupletari ex aliena jactura’ that means no man must grow rich because one’s must contract should loss. The doctrine of quasi-contracts has been an essential part and aspect of the Indian Contract Act, 1872 in dealing with such obligations which cause loss to one party over undue benefit to the other party.
