TAMIL NADU NATIONAL LAW

SCHOOL

A PROJECT OF CONTRACT
ON THE TOPIC
DIFFERENCE BETWEEN CONTRACT AND QUASI
CONTRACT
Submitted to: Mr. M Sunil Gladson
Submitted by: Gaurav Sinha
Roll no: BA0130021
2ND Semester

DECLARATION
I

do

hereby

declare

that

the

project

research

entitled

DIFFERENCE BETWEEN COINTRACT AND QUASI CONTRACT

submitted to the Tamil Nadu National Law School in fulfilment of
the requirement of the internal component is a record of the
original work done by me under the supervision and guidance of
Mr.M.Sunil Gladson and Prof. KGR and that the project submitted
has not been formed on the basis of any other project submitted
by any other university or college.

Place: Tiruchirappali
2

Date:

CERTIFICATE

This is to certify that the project entitled DIFFERENCE BETWEEN

CONTRACT AND QUASI CONTRACT submitted to the Tamil Nadu
National Law School in fulfilment of the internal component done
by GAURAV SINHA under the supervision of Mr.M.Sunil Gladson
and Prof.KGR.

Place: Tiruchirappali

Mr.M.Sunil Gladson

Date:

Acknowledgement
I would like to thank my political science teacher Prof. M Sunil
Gladson for giving me this topic and guiding me throughout the
project. Through this research project I have learned a lot about
the aforesaid topic and this in turn has helped me grow as a
student.

My

heartfelt

gratitude

also

goes

out

to

the

staff

and

administration of TNNLS for the infrastructure in the form of the

library that was a source of great help in the completion of this
project.

I also thank my friends for their precious inputs which have been
very helpful in the completion of this project.

CASES REFERRED
4

1 Central London Property Trust Ltd. v. High Trees House Ltd. [1947]
2 Three Rivers Trading Co., Ltd. v. Gwinear & District Farmers, Ltd. (1967)
111 Sol. J. 831
3 Allahabad High Court in Munni Bibi v. Triloki Nathand
4 Raghavan v. Alameru Ammal
5 Madhya Pradesh High Court in Transworld Shipping Services v. Owners
6 State of West Bengal v. B.K. Mondal and sons
7 Rajgarh v. MPSRTC
8 Pillo Dhunjishaw Sidhwa v. Municipal Corporation of the City of Ponna
9 Sri Shiba Prasad Singh v. Maharaja Srish Chandra Nanadi
10

Contents
1)Acknowledgement..4
2) Cases referred..5
3)CHAPTER I

Objective of research......8
Methodology of research......8
Limitation of research......8
Introduction.9

4)CHAPTER II
Essentials of contract.....11
Termination of a contract......12
Remedies for breach of contract..13
Position of quasi contract in Indian Law.14
Supply of necessaries.16
Payment by interested person.17
Liability to pay for non gratituous acts.19
Finders of goods.22
Mistake or coercion..22
Difference between contract and quasi contract24

5)Chapter-III
Conclusion....29
6

 Bibliography.30
Websites referred.31

AIMS AND OBJECTIVES

7

By doing this project I tend to analyze the DEFFERENCE BETWEEN QUASI CONTRACT
AND CONTRACT.

METHODOLOGY
Doctrinal method was used for the research in this project. Some journals, relevant books and
magazine were also used for this project.

Limitation of research
I have done this research relating to Misrepresentation. I have restricted myself to the general
concepts relating to this case and the ideology of relationships which are valid under law.

INTRODUCTION
A contract is like a promise between people. It is an understanding, a deal between two or more
people or organizations to do certain things. Each person or organization who agrees to do
something in a contract is called a party. In common law legal systems, a contract is an
agreement having a lawful object entered into voluntarily by two or more parties, each of whom
intends to create one or more legal obligations between them. . an agreement with specific terms
between two or more persons or entities in which there is a promise to do something in return for
a valuable benefit known as consideration1. Since the law of contracts is at the heart of most
business dealings, it is one of the three or four most significant areas of legal concern and can
involve variations on circumstances and complexities. The existence of a contract requires
finding the following factual elements: a) an offer; b) an acceptance of that offer which results in
a meeting of the minds; c) a promise to perform; d) a valuable consideration (which can be a
promise or payment in some form); e) a time or event when performance must be made (meet
commitments); f) terms and conditions for performance, including fulfilling promises; g)
performance. A unilateral contract is one in which there is a promise to pay or give other
consideration in return for actual performance. (I will pay you $500 to fix my car by Thursday;
the performance is fixing the car by that date). A bilateral contract is one in which a promise is
exchanged for a promise. (I promise to fix your car by Thursday and you promise to pay $500 on
Thursday)2. Contracts can be either written or oral, but oral contracts are more difficult to prove
and in most jurisdictions the time to sue on the contract is shorter (such as two years for oral
compared to four years for written). In some cases a contract can consist of several documents,
such as a series of letters, orders, offers and counteroffers. There are a variety of types of
contracts: "conditional" on an event occurring; "joint and several," in which several parties make
a joint promise to perform, but each is responsible; "implied," in which the courts will determine
there is a contract based on the circumstances. Parties can contract to supply all another's
requirements, buy all the products made, or enter into an option to renew a contract. The
1Central London Property Trust Ltd. v. High Trees House Ltd. [1947] KB 130
2 Feinman JM, Brill SR. (2006). Is an Advertisement an Offer? Why it is, and Why it
Matters. Hastings Law Journal.
9

variations are almost limitless. Contracts for illegal purposes are not enforceable at law. 2) v. to
enter into an agreement. Why is a contract used?
A contract is used when people or organizations have agreed to do something together. A
contract is often used to say
1.
2.
3.
4.
5.

what is expected of you

what you expect of the other person or organization
protect each others needs and rights
make each party more responsible for what that party promises to do
say what happens if a party does not keep its promise.

The elements of a contract are "offer" and "acceptance" by "competent persons" having legal
capacity who exchanges "consideration" to create "mutuality of obligation." Proof of some or all
of these elements may be done in writing, though contracts may be made entirely orally or by
conduct. The remedy for breach of contract can be "damages" in the form of compensation of
money or specific performance enforced through an injunction. Both of these remedies award the
party at loss the "benefit of the bargain" or expectation damages, which are greater than mere
reliance damages, as in promissory estoppels. The parties may be natural persons or juristic
persons. A contract is a legally enforceable promise or undertaking that something will or will
not occur3. The word promise can be used as a legal synonym for contract,[ although care is
required as a promise may not have the full standing of a contract, as when it is an agreement
without consideration. Contract law varies greatly from one jurisdiction to another, including
differences in common law compared to civil law, the impact of received law, particularly from
England in common law countries, and of law codified in regional legislation. Regarding
Australian Contract Law for example, there are 40 relevant acts which impact on the
interpretation of contract at the Commonwealth (Federal / national) level, and an additional 26
acts at the level of the state of NSW. In addition there are 6 international instruments or
conventions which are applicable for international dealings, such as the United Nations
Convention on Contracts for the International Sale of Goods4.
3 Supra 2
4 Feinman JM, Brill SR. (2006). Is an Advertisement an Offer? Why it is, and Why it
Matters. Hastings Law Journal.
10

ESSENTIAL ELEMENTS OF CONTRACT

The law of contract affects every single transaction between buyers and sellers. It is a legally
binding relationship between two or more people that is enforceable by law.
Essential Elements of a contract
1. Offer
2. Acceptance
3. Consideration
4. Intention to contract
5. Capacity to contract
6. Consent to contract
7. Legality of purpose

1. Offer: An offer is a proposal to give or do something and, when accepted, there is said to
be an agreement. It must be clear and may be implied by conduct e.g. taking goods to the
checkout.
2. Acceptance: This is a positive unqualified assent to all terms of the offer e.g. a house
buyer makes an offer of price for a house and seller is happy to accept.
3. Consideration: This refers to whatever is exchanged between the parties.
-It must be real
-It need not be adequate

11

-It must be legal e.g. The staff at the Beckham wedding signed a contract of silence in
which the
consideration was agreed at a 1. This was never paid which means a valid contract did not exist.
11 Intention to Contract: The Person must want to create legal relations. Therefore the
parties signing a contract must know that they are entering a legal agreement that cannot
be broken
12 Capacity to contract: This is the power of a natural person to enter into a contract.
The following parties do not have the capacity to enter a contract.
(i). Minors- people under 18 except for necessities e.g. food
(ii). Persons under the influence of alcohol or illegal drugs
(iii). Persons of unsound mind.

6 Consent to Contract: A person must enter into a contract of their own free will.
7 Legality of Purpose: This means that legally binding contracts can only be for legal
transactions. E.g a judge will not award compensation to a bank robber whose
getaway driver did not show up as agreed.
Invitation to treat is not the same as offer5- An invitation to treat invites a
person to make an offer to buy something. E.g. a price tag on a pair of jeans is an
invitation to buy the jeans. If the customer decides to buy the jeans, this is an offer.
If the shopkeeper accepts the offer, this is acceptance, therefore a contract has been
made.

5 Feinman JM, Brill SR. (2006). Is an Advertisement an Offer? Why it is, and Why it
Matters. Hastings Law Journal.
12

Termination of a Contract
A contract can come to an end when all the responsibilities and obligations that
arose under the contract are no longer required6. All rights that may have existed are no longer
exist when a contract is discharged (ended). A contract may end by the following
1. Performance- This is the most usual way and there must be complete and
exact performance by the parties involved. E.g. A two year work contract
between an employer and an employee comes to an end at the end of the two
years.
2. Agreement- Both parties agree to end the contract early therefore they are
free from any legal obligations. E.g. A premiership player is not scoring enough
goals and is under pressure from his fans. He agrees with his clubs decision to
release him from his contract
3. Frustration Due to unforeseen circumstances, it has been deemed
impossible to complete the contract. E.g. The planned Michael Jackson concerts
planned to go ahead in London could not take place due to the unforeseen death
of the artist.
4. Breach of Contract a condition has been broken by one of the parties. E.g. A
professional footballer fails o turn up for training and is seen partying instead.
( Selected examples taken from Fallon LC Business Magazine)

6 DiMatteo L. (1997). The Counterpoise of Contracts: The Reasonable Person

Standard and the Subjectivity of Judgment. South Carolina Law Review.
13

Remedies for Breach of Contract

The remedies for breach of contract are
1. Damages Monetary compensation is awarded to the injured party. A court
decides on this figure. E.g. Robbie Williams sacked his manager and the manager was awarded
1.7million because he had honored the terms of the contract.
2. Specific Performance- A judge orders that certain orders are carried out. It is a
Suitable means if damages are not important. E.g. A builder and a client disagree on the standard
of workmanship carried out on a house. The builder is ordered by the Judge to upgrade the
work7.
3. Rescind the contract- A judge attempts to place both parties back in the same
position as they were before the contract. The purpose of this is to release the
parties from the contract8. E.g. Failure to obtain planning permission on a site.

POSITION OF QUASI CONTRACT IN INDIAN LAW:

7 Central London Property Trust Ltd. v. High Trees House Ltd. [1947] KB 130
8 Ibid 7
14

A legal agreement created by the courts between two parties who did not have a previous
obligation to each other. A normal contract requires two parties to consent to mutually agreeable
terms. Under a quasi contract, neither party is originally intended to create an agreement.
Instead, an arrangement is imposed by a judge to rectify an occurrence of unjust enrichment. A
quasi-contract, also called an implied in-law-contract, is not really a contract at all in the normal
meaning of a contract. A quasi-contract is an obligation created and imposed by a court of law,
in the absence of an enforceable agreement between the parties. Quasi-contracts are needed to
resolve issues with parties where there were no enforceable contracts or agreements in place.
This contract is invoked by order of the courts when unjust enrichment occurs. When a person
retains money or benefits that in all fairness belong to another, would exist without judicial
assistance9.
A quasi contract exists by order of a court of law and not by agreement of the parties. Courts
create quasi contracts to avoid the unfair enrichment of a party in a dispute over payment for a
goods or services rendered.

In some cases a party who has suffered a loss in a business

relationship may not be able to recover for the loss without evidence of a contract or some legal
agreement. To avoid this unjust result, courts create this fictitious agreement where no legally
enforceable agreement exists.
An example of a quasi-contract would be if a pool builder built a pool on Johns property.
However, the pool builder signed a contract with Bob, who claimed to be Johns agent but, whom
in fact, was not. Although there is no binding contract between John and the pool builder, most
courts would allow the pool builder to recover the cost of the services and materials from John to
avoid an unjust result10. A court would accomplish this by creating a fictitious agreement
between the pool builder and John holding John responsible for the cost of the builder's services
and materials. Chapter V of the Indian contract Act 1872 deals with the situations qualifying the
9 The UCC states, "Consequential damages... include any loss... which could not
reasonably be prevented by cover or otherwise." UCC 2-715.In English law the chief
authority on mitigation is British Westinghouse Electric and Manufacturing Co. v.
Underground Electric Railway Co. of London[1912] AC 673, see especially 689 per
Lord Haldane.
10 Ibid 9
15

quasi contractual obligations under the heading Of certain relations resembling to those created
by contract. The chapter avoids the words quasi contract, and in view of the clear statutory
authorization of the courts in India is not hindered in allowing relief under the different sections
of the Act by the theoretical considerations concerning quasi contracts. But the English cases do
provide valuable guidance:
Not only as to the scope of the relief
But also as to the way the provisions should be interpreted to keep hem in tune with the
changing notions of justice.
Provisions under Indian contract law:Section 68 to 72 of the Indian Contract Act 1872 provides for five kinds of quasi-contractual
obligations they are as follows:1.

supply of necessaries [sec. 68]

2.

payment by interested person [sec. 69]

3.

Liability to pay for non-gratuitous acts [sec. 70]

4.

finder of goods [sec. 71]

5.

Mistake or coercion [sec. 72]

SUPPLY OF NECESSARIES [SECTION 68]

Where necessaries are supplied to a person who is incompetent to contract or to someone who is
legally bound to support, the supplier is entitled to recover the price from the property of the
incompetent person11.

11 M.P. Furmston, Cheshire, Fifoot & Furmston's Law of Contract, 15th edn (OUP:
Oxford, 2007) p.779.
16

Section 68 reads as under:

CLAIM

FOR

THE

NECESSARIES

SUPPLIED

TO

PERSON

INCAPABLE

OF

CONTRACTING, OR ON HIS ACCOUNT12: - If a person, incapable of entering into a contract

or anyone whom he is legally bound to support, is supplied by the another person with
necessaries suited to his condition in life, the person who has furnished such supplies is entitled
to be reimbursed from the property of such incapable person.
Ingredients of the section:According to the language drawn upon by section 68 we got to know the following essentials to
apply this section.
1)

Necessaries are being supplied,

2)

Necessaries so supplied must be suited to the condition of life of that person to whom they

are supplied,
3)

Necessaries are supplied to a person who is incapable of entering into a contract or anyone

whom he is legally bound to support,

4)

The reimbursement is to be claimed from the property of that incapable person.

Examples:a)

A, Supplies to B, a lunatic, with the necessaries suitable to his condition in life. A is entitled

to be reimbursed from Bs property.

b)

A, supplies the wife and children of B, a lunatic, with the necessaries suitable to their

conditions in life. A is entitled to be reimbursed from Bs property.

PAYMENT BY INTERESTED PERSON [SECTION 69]

12 M.P. Furmston, Cheshire, Fifoot & Furmston's Law of Contract, 15th edn (OUP:
Oxford, 2007) p.779.
17

Reimbursement by a person paying money due by another, in payment of which he is interested:

- A person who is interested in the payment of money, which another is bound by law to pay, and
who therefore pays it, is entitled to be reimbursed by the other13.

Illustration:B holds a land in Bengal, on a lease granted by A, the Zamindar. The Revenue payable by A to
the Government being in arrears, his land is advertised for the sale by the government. Under the
Revenue Law, the consequences of such sale will be the annulment of Bs Lease. B, to prevent
the sale and annulment of his own lease, pays to the government the sum due from A. A is bound
to make good to B the amount so paid14.
CONDITIONS FOR LIABILITY:The conditions for liability under this section may now be stated:
1)

PAYER MUST BE INTERESTED IN MAKING PAYMENT:-

The first condition for establishing the liability is that the Plantiff should be interested in making
payment. The interest which the plantiff seeks to protect must be of course legally recognizable.
Allahabad High Court in Munni Bibi v. Triloki Nathand accordingly Madhya Pradesh High
Court in Transworld Shipping Services v. Owners etc.has held that the plantiffs honest belief
that he has an interest to protect is enough for provide him reimbursement under this section.
2)

BUT SHOULD NOT BE BOUND TO PAY:-

The second essential condition is that it is necessary that the plantiff himself should not be bound
to pay. He should only be interested in making the payment only for the purpose of protecting his

13 Michida S. (1992) Contract Societies: Japan and the United States Contrasted.
Pacific Rim Law & Policy Journal.
14 M.P. Furmston, Cheshire, Fifoot & Furmston's Law of Contract, 15th edn (OUP:
Oxford, 2007) p.779 n.130.
18

own interest. Where a person is jointly liable with others to pay, a payment by him of the others
share would not give him a right of recovery under this section.
3)

DEFENDANT SHOULD BE UNDER A LEGAL COMPULSION TO PAY:-

Thirdly the defendant should have been Bound by Law to pay the money. The words bound
by law have been held after some hesitation, to mean bound by law or by contract. It is not
necessary that the liability should only be statutory. In a judgment of Privy Council it was held
that it is enough that the defendant at the suit of any person might be compelled to pay15
Thus it has to be kept in mind as held by Madras High Court in Raghavan v. Alameru Ammalthat
where a person is morally bound and not legally compellable to pay, he will not be bound to pay
the party discharging his moral obligation.
4)

PAYMENT SHOULD BE MADE BY ONE PARTY TO SOME OTHER PERSON

Lastly the Plantiff should have made payment to some other person and not to himself. As for
example in Secretary of State for India v. Fernandes, a certain government was a tenent of a land
and paid to itself out of the rent due to the Landlord the arrears of the Land Revenue due to
itself, the government could not recover from the Landlord. This did not come within the
principle of this section as this is not a payment to another.

LIABILITY TO PAY FOR NON GRATUITOUS ACTS: [SECTION 70]

Obligation of a person enjoying benefit of a non-gratuitous act:- where a person lawfully does
anything for another person, or delivers anything to him, not intending to do so gratuitously, and
such other person enjoys the benefit thereof, the latter is bound to make compensation to the
former in this respect of, to restore, the thing so done or delivered16.
Illustrations:15 Three Rivers Trading Co., Ltd. v. Gwinear & District Farmers, Ltd. (1967) 111 Sol.
J. 831
16 Ibid 15
19

a)

A, a tradesman leaves his good at Bs place/home by mistake. B treats the goods as his

own. He is bound to pay A for them.

b)

A saves Bs property from fire. A is not entitled to compensation from B, if the

circumstances shows that he intended to act gratuitously.

Conditions of Liability under the section:According to GAJENDRAGADEKAR J (afterwards CJ) stated in State of West Bengal v. B.K.
Mondal and sons
The condition on which the liability under this section arises would be:a)
b)

A person should lawfully do something for another person or deliver something to him;
In doing the said thing or delivering the said thing he must not intend to act gratuitously;

and
c)

The other person for something is done or to whom something is delivered must enjoy the

benefit thereof.
1)

NOT INTENDING TO DO SO GRATUITOUSLY

Thus one of the purposes of this section is to assure payment to a person who has done
something for another voluntarily and yet with the thought of being paid. He should have
contemplated being paid from the very beginning. in Municipal council, Rajgarh v. MPSRTC it
was held that the Municipal Council which constructed and maintained a bus stand was allowed
to recover some charges from bus operators who used the stand though there was no agreement
to that effect.
2)

SECTION WOULD NOT ENCOURAGE OFFICIOUS INTERFERENCE IN AFFAIRS

OF OTHERS:-

20

Secondly the person to whom the act is done is not bound to pay unless he had the choice to
reject the services. If a person delivers something to another, it would be open to the latter to
refuse to accept the thing and return it/: in that case section 70 would not come into operation.
In other words, the person said to be liable under section 70 always has the option not to accept
the thing. It is only where he voluntarily accepts the thing or enjoys the work done that the
liability under section 70 arises17.
In the application to this principle, the courts have had to strike a balance between two factors.
Firstly, the rule cannot be used by anybody to make officious interference in the affairs of
another.
Secondly the court will not compel a person to pay for the services which have been thrust upon
him against his will.
3)

REQUEST FOR SERVICES CREATES IMPLIED PROMISE TO PAY:-

Yet the third necessity is that services should have been rendered without any request.
Reasonable compensation may, however, be recovered for the services rendered at request. This
has been so held by the Supreme Court in State of West Bengal v. B.K. Mondal & Sons:
Facts of the Case
In this case the plantiff, on the request of an officer of the State of West Bengal, constructed a
kutcha road, guard room. Office and etc. for the use of the Civil Supplies Department of the
government18. The State accepted the work but tried to escape the liability under the pretence that
no contract has been concluded in accordance in accordance with the requirements of section
175(3) of the Government of India Act 1935 (now Article 299 of the Constitution of India). the
Contractor finally was forced to use his luck with the state under Section 70 of this Contract Act,
1872 and finally supreme court held that the State is liable to reimburse the contractor.

17 Three Rivers Trading Co., Ltd. v. Gwinear & District Farmers, Ltd. (1967) 111 Sol.
J. 831
18 Ibid 17
21

The principle of this case has been reaffirmed by the Supreme Court in Pillo Dhunjishaw Sidhwa
v. Municipal Corporation of the City of Ponna
4)

LAWFUULY DOES:-

Fourthly, services should have been rendered lawfully. It has been a point of emphasis that
between the person claiming compensation and the person, against whom it is claimed, some
lawful relationship must exist and it should arise by reason of the fact that has been done for the
former which has been accepted and enjoyed by the latter19.
5)

NON-GRATUITOUS ACTS:-

In the fifth place, the person rendering services should not have intended to act gratuitously. The
decision of the Madras High court in Damodara Mudalair v. Secretary of State for India is the
leading authority. in this case a number of villages were drawing irrigation waters from the tank.
Some of the villages were under the direct state tenancy, other Zamindar. The government
carried out repairs to the tank for its preservation. The Zamindar has also enjoyed the benefit of
the repairs.
so it was accordingly held that Zamindar is liable to make proportional contribution towards the
expense of the repairs.
6)

ENJOYS THE BENEFIT:-

Lastly the defendant must have enjoyed or derived a direct benefit from the payment or services.
As for where no services have been rendered at all, for example where the government cancelled
a lease granted to the plantiff by an officer who was not so authorized, no relief can be allowed
under the section20.

FINDER OF GOODS:- [SECTION 71]

19 New York Civil Procedure Law and Rules 7501, et seq
20 Martin, E [ed] & Law, J [ed], Oxford Dictionary of Law, ed6 (2006, London:OUP).
22

Responsibility of finder of goods: A person, who finds goods belonging to some another and
takes them into his custody, is subject to the same responsibility as a bailee.
Thus in respect of duties and liabilities, a finder is treated at par with bailee. The finders
position is therefore considered along with bailment.

MISTAKE OR COERCION: [SECTION 72]

Section 72 deals with the payments made or things delivered under mistake or coercion.
Liability of a person to whom money is paid, or things delivered, by mistake or under coercion: A person to whom money has been paid, or anything delivered, by mistake or under coercion,
must repay or return it.
Illustration: A and B jointly owe 100 rupees to C. A alone pays the amount to C and B, not knowing the
fact pays another 100 rupees to C. C is bound to repay the amount to B.
A railway company refuses to deliver up certain goods to the consignee except upon the
payment of an illegal charge of 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.
Mistake of Fact or Mistake of Law:Money paid under mistake is recoverable irrespective of the fact that whether the mistake is of
fact or of law. The controversy between the High Court Decisions as to whether money paid
under mistake of law could be recovered was set at rest by the Privy Council in Sri Shiba Prasad
Singh v. Maharaja Srish Chandra Nanadi,21
The Payment by Mistake in section 72 must refer to a payment which was not legally due and
which could not have been enforced: the Mistake is on thinking that the money paid was due

21Martin, E [ed] & Law, J [ed], Oxford Dictionary of Law, ed6 (2006, London:OUP).
23

when in fact, it was not due. There is nothing in section 72 to relate with that whether the
mistake is of law or of a fact22.

DIFFERENCE BETWEEN CONTRACT AND QUASI

CONTRACT

22 Ibid 21
24

The Contract Act: Meaning and Scope of Quasi Contract

A quasi contract is a fictitious contract created under legal obligations, similar to a valid
contract. These contracts are also known as implied-in-law contracts. What makes this different
is that the parties involved do not intend to create a contract. A quasi contract is created by the
Court. For the same reason, there is no actual offer or acceptance or an agreement between the
parties. Also, a quasi contract is based on the principle of unjust enrichment. According to this
principle, a person is not allowed to draw benefit at the cost of someone else23.
Lets understand how to apply the term quasi contract through the following example: Suppose
a mechanic is called to repair the car of Mr. X. However, the mechanic thinks that Mr. Ys car is
the one belonging to Mr. X and repairs it accidentally. Mr. Y sees the mechanic repairing his car,
but he does not stop him from doing so, because he is secretly pleased to get his car fixed free of
cost. When the mechanic asks for payment from Mr. Y, he refuses to pay the bill. However, by
implication, a quasi contract has been created from the moment Mr. Y spotted the mechanic
repairing his car and let it continue. Mr. Y would be held liable for payment if it can be proved in
court that he was aware of the mistake of the mechanic and let him continue.
The Contract Act: Cases Where Quasi Contractual Obligations Arise
:
Supply of Necessaries to an Incompetent Person
Under section 68 of the Indian Contract Act, 1872, a person, who supplies another person, who is
inept to enter into a contract, with necessaries of life is entitled to get a share from the property
of the latter.
Payment by an Interested Person
Under section 69 of the Act, a person, who is interested in payment of money which was
supposed to be paid by another but pays it, is entitled for reimbursement from the said person.
23 Martin, E [ed] & Law, J [ed], Oxford Dictionary of Law, ed6 (2006, London:OUP).
25

Lets use a simple example to explain this. Suppose you were on a holiday and your neighbor
pays your house tax on your behalf, you are liable to pay back your neighbor for making
payment of your behalf in your absence.
Performance of Non-Gratuitous Act
Section 70 provides that if a person has received lawful services from another person, which the
former had not asked for but needed at that moment, the other person is entitled to be
compensated for the services that were rendered.
Becoming Finder of Lost Goods
Under section 71 of the Act, a person who finds goods belonging to another person and takes the
custody of the goods is subjected to the responsibilities of having the possession of the property
under bailment and cannot use it for his own good. By implication, the finer has to safeguard it24.

Payment of Money by Mistake

Under section 72 of the Act, a person who receives money or goods by mistake or under
compulsion is liable to return it.

Contracts
1.
A contract is a contract between two parties. In contract, always there is an agreement
between the parties.
2.

In contract, always there is an agreement between the parties.

3.

In contract, the parties must give their consent to it.

4.

In contract, the liability exists between the parties by the terms of the parties.

5.

Examples: A sells his house to B for certain consideration. It is a contract. The consumers
purchase the goods and services from the shop-owners.

6.

It is created by the operation of the contract.

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7.

It is right in rem, and also right in personam.

8.

Sec. 2(h) of the Indian contract act, 1872, defines contract: an agreement enforceable by
law is a contract.

9.

The word contract is divided from the Latin contractum which gives meaning
drawn together or consensus ad idem (identity of minds). Thus the meaning of contract
is a drawing together of two or more minds to form a common intention giving rise to an
agreement.

10.

11.

10. Essentials:
o

Free consent;

The parties must be competent;

There must be lawful consideration and lawful object;

The agreement must not expressly be declared to be void; and

If the law in force requires, it must be registered.

Example: A enters into a hotel and eats some food. It is the liability of A to pay the

consideration for food. It is an implied contract. The contract is implied in fact. It is a true
contract.
Quasi Contracts
1.

A quasi-contract is not a real contract. Quasi contracts are also known as constructive
contracts or certain relations resembling those created by contracts.

2.

Where as in quasi-contract, there is no agreement between the parties.

3.

Where as in quasi-contract, the parties do not consen25t.

4.

In quasi-contract, the liability exists independent of the agreement and rests upon equity,
justice and good conscience.

5.

Example: A is a lunatic. He has some property. B-son of A, met an accident. Moved by

the pitiable condition of the boy-B, X spends Rs. 1,000/- for Bs treatment. X can claim this
amount from A and his property.

6.

It is imposed by law. It is not created by the operation of the contract26.

25Infra 21
26 Ibid 25
27

7.

It is right in personam. I.e. strictly available against a person and is not available against
the entire world.

8.

Salmond defines quasi contracts: there are certain obligations which are not in truth
contractual in the sense of resting on agreement, but which the law treats as if they were27.

9.

Lord Mansfield explained that law as well as justice should try to prevent unjust
enrichment. I.e. enrichment of one person at the cost of another. He explains: it is clear
that any civilized system of law is bound to provide remedies for cases of what has been
called unjust enrichment or unjust benefit, i.e. to prevent a man from retaining the money of,
or some benefit derived from, another which it is against conscience that he should keep.
Such remedies in contract or tort, and are now recognized to fall within a third category of
the common law which has been termed as quasi-contract or restitution28.

10.

Essentials:
o

It is imposed by law. It is not created by contract;

It is a right in personam;

The person who incurs expenses is entitled to receive money (unjust enrichment);
and
It is raised by a legal fiction.

o
11.

Example: A- a publisher entrusts to B a printer to print a book. Half of the printing work
is completed. Then B finds that the book is libelous one and he may be prosecuted by the
state. He stops the work. What would be his position? Then cames the doctrine of quasicontracts. It gives reasonable remuneration for the services actually rendered by B. B is
entitled to get reasonable remuneration from A for the work completed. Here it becomes a
contract implied in law. It is a quasi-contract29.

27 Martin, E [ed] & Law, J [ed], Oxford Dictionary of Law, ed6 (2006, London:OUP).
28 Ibid 27
29 P.S. Atiyah, The Rise and Fall of Freedom of Contract (1979) Clarendon Press ISBN
0-19-825342-7
28

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CONCLUSION
A quasi-contract (or implied-in-law contract or constructive contract) is
a fictional contract created by courts for equitable, not contractual, purposes. A quasicontract is not an actual contract, but is a legal substitute formed to
impose equity between two parties. The concept of a quasi-contract is that of a contract
that should have been formed, even though in actuality it was not. It is used when a
court finds it appropriate to create an obligation upon a non-contracting party to avoid
injustice and to ensure fairness. Whereas the basic purpose of contract law is to provide
a framework within which individuals can freely contract. The contract can legally bind
the contracting parties by the creation of laws which are applicable only to the very
individuals that create the contract and its subsequent legally binding laws

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BIBLIOGRAPHY
1. Ewan McKendrick, Contract Law - Text, Cases and Materials (2005) Oxford University Press
ISBN 0-19-927480-0
2. P.S. Atiyah, The Rise and Fall of Freedom of Contract (1979) Clarendon Press ISBN 0-19825342-7
3. Randy E. Barnett, Contracts (2003) Aspen Publishers ISBN 0-7355-6525-2
4. Scott Fruehwald, "Reciprocal Altruism as the Basis for Contract," 47 University of Louisville
Law Review 489 (2009).
5. Willmott, L, Christensen, S, Butler, D, & Dixon, B 2009 Contract Law, Third Edition, Oxford
University Press, North Melbourne
6. Hans Wehberg, Pacta Sunt Servanda, The American Journal of International Law, Vol. 53, No.
4 (Oct., 1959), p.775.; Trans-Lex.org Principle of Sanctity of contracts
7. Atiyah PS. (1986) Medical Malpractice and Contract/Tort Boundary. Law and Contemporary
Problems.
8. Blake V. (2012). When Is a Patient-Physician Relationship Established Virtual Bernstein DE.
(2008). Freedom of Contract. George Mason Law & Economics Research Paper No. 08-51.
9. Douglas D. (2002). Contract Rights and Civil Rights. Michigan Law Review.
10."Contract Management". The International Foundation for Information Technology.
Retrieved 17 February 2014
11. Douglas Laycock, Modern American Remedies, 3rd edition (2002) pg. 566
12. Chapitre Ier : Des quasi-contrats Code civil Legifrance.gouv.fr Retrieved 31 March 2013;
13. "Quasi-contrat", Lexique des Termes Juridiques, Dalloz, 2013, pg. 745

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WEBSITES REFERRED

1 indiankanoon.org
2 www.wikipedia.com
3 egaleseetc.blogspot.in/2012/01/quasi-contracts.html
4

http://www.lawteacher.net/contract-law/essays/the-basic-purpose-of-contract-

law.php

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