Quasi-contract

From Wikipedia, the free encyclopedia A quasi-contract (or implied-in-law contract) is a fictional contract crd by courts for equitable, not contractual purposes.[1] A quasi-contract is not an actual contract, but is a legal substitute for a contract 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.[2][3][4] It is invoked in circumstances of unjust enrichment,[4] and is connected with the concept of restitution. Generally the existence of an actual or implied-in-fact contract is required for the defendant to be liable for services rendered, and a person who provides a service uninvited is an officious intermeddler who is not entitled to compensation. "Would-be plaintiffs cannot deliver unordered goods or services and demand payment for the benefit....A corollary is that one who does have an enforceable contract is bound by the contract's terms: subject to a few controversial exceptions, she cannot sue for restitution of the value of benefits conferred..." [5] However, in many jurisdictions under certain circumstances plaintiffs may be entitled to restitution under quasicontract (as in the example of Oklahoma below). Quasi-contracts are defined to be "the lawful and purely voluntary acts of a man, from which there results any obligation whatever to a third person, and sometime a reciprocal obligation between the parties."[6]

Contents
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1 Elements 2 Contract compared 3 Liability 4 Examples 5 See also 6 Notes

[edit] Elements
According to the Oklahoma pattern jury instructions, the elements of quasi-contract are: 1. Plaintiff furnished / rendered valuable goods / services to Defendant with a reasonable expectation of being compensated; 2. Defendant knowingly accepted the benefits of the goods / services; and

3. Defendant would be unfairly benefited by the services / receiving the goods if no compensation were paid to the Plaintiff.[7] Knowledge, the second element, is required, and if the defendant had no knowledge of the benefits, there would be no contract of any kind, even a quasi-contract.[3]

[edit] Contract compared

In contracts, it is the consent of the contracting parties which produces the obligation; in quasicontracts no consent is required, and the obligation arises from the law or natural equity, on the facts of the case. These acts are called quasi-contracts, because, without being contracts, they bind the parties as contracts do.[citation needed] "A quasi-contract is not really a contract at all in the normal meaning of a contract," according to one scholar, but rather is "an obligation imposed on a party to make things fair."[3] The Oklahoma Supreme Court has: described the distinction between a contract and a quasi-contract in T & S Inv. Co. v. Coury, 593 P.2d 503 (Okla. 1979), as follows: 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 in order 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. (quoting from Berry v. Barbour, 279 P.2d 335, 338 (Okla. 1954)). Oklahoma Uniform Jury Instructions, 23.10 citing cases therein at.[7]

[edit] Liability
The defendant's liability under quasi-contract is equal to the value of the benefit conferred by the plaintiff. The value is the fair market value of the benefit and not necessarily the subjective value that the defendant enjoys.[citation needed] A traditional measure of the fair market value is called quantum meruit, for "as much as is deserved."[citation needed] For example, accountant prepares taxpayer's taxes, finding a way to get him an unusually large refund. Tax-payer doesn't pay accountant. Assuming a court finds no contract, tax-payer is only liable for the fair market value of tax preparation services, which is not inflated up to account for the unusually large refund he enjoyed.[citation needed] Under Oklahoma law:

The measure of damages in a quasi-contract action is the amount which will compensate the party aggrieved for the detriment proximately caused thereby, and, if the obligation is to pay money, the detriment caused by the breach in the amount due by the terms of the obligation. Welling v. American Roofing & Sheet Metal Co., Inc., 617 P.2d 206, 209-210 (Okla. 1980), cited at.[7] The party to be charged is any defendant, or in the case of a guarantee or surety, a co-defendant, in a breach of contract lawsuit.

[edit] Examples
An example of a quasi-contract is the case of a plumber who accidentally installs a sprinkler system in the lawn of the wrong house. The owner of the house had learned the previous day that his neighbor was getting new sprinklers. That morning, he sees the plumber begin installing them in his own lawn. Pleased at the mistake, he says nothing, and then refuses to pay when the plumber hands him the bill, claiming that he never agreed to pay for the sprinklers. If the plumber can prove that the man knew that the sprinklers were being installed mistakenly on his property and failed to prevent the installation, the court would make him pay under a quasicontract theory. If that knowledge could not be proven, he would not be liable.[citation needed] Compare this example with the three elements from above: 1. The plumber conferred a benefit on the owner by installing the sprinkler system. 2. The owner accepted the installation of the sprinkler system by not stopping the plumber when he first noticed the mistake. 3. Without payment, the owner will unfairly benefit at the expense of the mistaken plumber. Because the owner failed to stop the plumber from installing the sprinkler system, with the intention of benefiting from the mistake, the court will create a quasi-contract. The owner's failure to refuse the plumber's service will be interpreted as an implicit agreement to pay for it and the court will treat it as if there was an actual contract. However, if the owner were away from home at the time of the installation and had no chance to stop it, he could not be held liable and the plumber will be forced to bear the costs of his mistake. Examples of quasi-contracts vary by jurisdiction. A painter, who mistakenly paints a house with the owner's knowledge, can sue in court to get paid.[3] A mechanic who fixes the brakes to a car as requested, but who also makes repairs to the axle (without which the brakes would not function properly), has an implied quasi-contract.[2] A homebuilder who signs a contract with a purported agent, who actually has no authority, can recover the cost of the services and materials from the homeowner.[4]

Quasi Contract
A quasi contract is an obligation that is imposed by the courts to avoid injustice or unjust enrichment. Acceptable alternative ways of describing a quasi contract are:

An implied-in-law contract imposed by the courts to prevent injustice. A special form of contract that lacks mutual assent of the parties but which is imposed on the parties by the courts to avoid injustice.

Notes on Quasi Contract: An example of a quasi contract is:

Joe, a painter, mistakenly paints Helen's house, with her knowledge and Helen refuses to pay since she had never made a contract with Joe. The court will create a contract between them in this circumstance and Helen will have to pay.

Note, however, that if Helen had no knowledge of Joe doing the job, there would be no contract of any kind. A quasi contract is not really a contract at all in the normal meaning of a contract. It is really an obligation imposed on a party to make things fair.

What Does Quasi Contract Mean? 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.

Investopedia explains Quasi Contract When one party knowingly receives something for nothing, the courts may impose a quasi contract. For example, if UPS delivers a new television to Zoe that she did not order and she keeps the television and does not attempt to return it to the company that mistakenly shipped it to her, a judge could impose a quasi-contract to force her to pay for the television. Zoe did not intend to purchase the TV, and the TV company did not intend to sell her a TV, but since she chose to benefit from the TV at the company's expense, the court requires her to reimburse the TV company to make the situation fair.

Quasi Contract

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An obligation that the law creates in the absence of an agreement between the parties. It is invoked by the courts where Unjust Enrichment, which occurs when a person retains money or benefits that in all fairness belong to another, would exist without judicial relief. 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. 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 legally recognized agreement. To avoid this unjust result, courts create a fictitious agreement where no legally enforceable agreement exists. To illustrate, assume that a homebuilder has built a house on Alicia's property. However, the homebuilder signed a contract with Bobby, who claimed to be Alicia's agent but, in fact, was not. Although there is no binding contract between Alicia and the homebuilder, most courts would allow the homebuilder to recover the cost of the services and materials from Alicia to avoid an unjust result. A court would accomplish this by creating a fictitious agreement between the

homebuilder and Alicia and holding Alicia responsible for the cost of the builder's services and materials. Quasi contracts sometimes are called implied-in-law contracts to distinguish them from impliedin-fact contracts. An implied-in-law contract is one that at least one of the parties did not intend to create but that should, in all fairness, be created by a court. An implied-in-fact contract is simply an unwritten, nonexplicit contract that courts treat as an express written contract because the words and actions of the parties reflect a consensual transaction. The difference is subtle but not without practical effect. One notable difference between the two implied contracts is that courts have no jurisdiction over quasi-contract claims against the federal government. Under the doctrine of Sovereign Immunity, the federal government cannot be sued without its consent. An implied-in-fact contract arises from an actual agreement that was not memorialized in writing, and if an agent of the government entered into an agreement, a court could find consent to suit on the part of the government. A quasi-contract claim, by contrast, does not allege that an agreement existed, only that one should be imposed by the court to avoid an unjust result. Because a quasi-contract claim does not allege any consent on the part of the government, it would fail under the doctrine of sovereign Immunity. A quasi contract may afford less recovery than an implied-in-fact contract. A contract implied in fact will construct the whole agreement as the parties intended, so the party seeking the creation of an implied contract may be entitled to expected profits as well as the cost of labor and materials. A quasi contract will be created only to the extent necessary to prevent unjust enrichment. As one court has put it, contracts implied in law are "merely remedies granted by the court to enforce equitable or moral obligations in spite of the lack of assent of the party to be charged" (Gray v. Rankin, 721 F. Supp 115 [S.D. Miss. 1989]). The amount of recovery for an implied-in-law contract usually is limited to the cost of labor and materials because it would be unfair to force a person who did not intend to enter into a contract to pay for profits. Quasi contracts are made possible by the doctrine of Quantum Meruit (Latin for "as much as is deserved"), which allows courts to imply a contract where none exists. Quantum meruit includes implied-in-fact contracts as well as quasi contracts. Courts also use the term quantum meruit to describe the process of determining how much money the charging party may recover in an implied contract.

The Contract Act: The Concept of a Quasi Contract

Mon, 05/17/2010 - 10:26 LIG Reporter The formation and validity of a contract in India is regulated by the Indian Contract Act, 1872. The Act extends to whole of India, except for Jammu and Kashmir. A contract can be explained as, an agreement enforced by law. For an agreement to be legally enforceable, it must constitute a clear offer and acceptance of the offer, by an offeree.

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 else. 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.