by Quasi contract refers to a legal obligation imposed by law between two parties even though no formal contract exists between them. Unlike a traditional contract, which is based on mutual agreement and consent, a quasi contract is not the result of an explicit offer and acceptance. Instead, it is created by law to prevent one party from being unjustly enriched at the expense of another.
In simple terms, a quasi contract ensures fairness and justice in situations where one party benefits unfairly from another’s actions or resources. For example, if person A accidentally pays person B’s debt or delivers goods by mistake, B is legally obliged to repay A or return the goods, even though there was no agreement between them.
Under the Indian Contract Act, 1872, Sections 68 to 72 deal with quasi contracts. These provisions cover cases such as the supply of necessaries to incapable persons, payment by interested persons, obligations to pay for non-gratuitous acts, recovery by a finder of lost goods, and repayment of money or goods delivered by mistake or under coercion.
The key principle behind quasi contracts is unjust enrichment — the idea that no one should unfairly benefit at another’s loss without compensating them. Courts impose these obligations to uphold fairness, equity, and justice, treating the situation “as if” there were a contract, even though no formal contract was ever made.
Performance of Quasi Contracts:
- Meaning of Performance of Quasi Contracts
The performance of quasi contracts refers to fulfilling obligations imposed by law, even when no formal agreement exists. These obligations arise to prevent unjust enrichment and ensure fairness. For example, when someone pays another’s debt to protect their own interests, the law requires repayment. The party benefiting must perform their duty under these legal obligations. Unlike regular contracts, quasi contracts depend on legal imposition, not mutual consent, but they still require fair performance to balance rights.
- Supplying Necessaries to Incompetent Persons
Under Section 68, when a person supplies essential goods or services (like food, medicine, or shelter) to someone incapable of contracting (such as a minor or mentally unsound person), the supplier is entitled to compensation. Performance here means ensuring the delivery of necessary items and then seeking reimbursement from the incompetent person’s property. It is not about enforcing a mutual promise but about fulfilling a legal duty and then claiming rightful payment for the supplied necessities.
- Reimbursement for Payment by Interested Person
Section 69 covers cases where one party pays money that another is legally obliged to pay. For example, A pays B’s tax to protect their own property interests. B must reimburse A. Performance here involves both paying the obligation initially and the repayment process afterward. The law imposes this duty to ensure fairness and avoid unjust burdens on someone who steps in to protect shared or related interests, even without an express contract between the parties.
- Compensation for Non-Gratuitous Acts
Under Section 70, if a person delivers goods or performs a service lawfully and without intention of making a gift, the receiving party must compensate for the benefit. Performance here includes delivering the goods or service and the recipient’s duty to pay for the advantage gained. For example, if A mistakenly delivers construction materials to B, and B uses them, B must compensate A. The performance obligation arises not from agreement, but from benefiting from the act.
- Finder of Goods Responsibilities
Section 71 treats a finder of goods as a bailee. This means they must take reasonable care, safeguard the goods, and try to return them to the rightful owner. Performance under this quasi contract includes protecting the found property and not misusing it. The finder is also entitled to recover reasonable expenses incurred in preserving the goods. This ensures fairness, as both the finder and the owner hold duties toward each other, imposed by law.
- Return of Money or Goods Received by Mistake or Coercion
According to Section 72, if someone receives money or goods by mistake or under coercion, they are bound to return it. Performance here involves identifying the wrongful receipt, taking steps to return the goods or repay the money, and ensuring no unjust enrichment. For example, if A accidentally transfers funds to B, B has a legal obligation to refund the amount. This performance ensures fairness by correcting mistakes or undoing coerced transfers.
- Quantum Meruit Claims
Quantum meruit means “as much as is deserved.” It applies when partial performance is accepted, even if the contract cannot be completed. For example, if a contract is terminated midway, the party that has already delivered part of the service can claim payment proportionate to the work done. Performance here means completing the partial work and receiving fair compensation. This prevents loss of effort or materials and ensures that no one works without reasonable payment under legal rules.
- Legal Enforcement of Quasi Contractual Duties
Although quasi contracts do not arise from mutual agreement, courts can enforce their performance. When one party unfairly benefits from another’s actions or resources, the law imposes duties to perform obligations fairly. Performance can be enforced through legal action, requiring the benefiting party to pay compensation, return goods, or reimburse expenses. This ensures that even without formal contracts, the justice system maintains fairness and balance, preventing wrongful enrichment at another’s expense.
Nature of Quasi Contracts:
- Obligation Without Agreement
The primary nature of quasi contracts is that they create legal obligations without any formal agreement between the parties. Unlike normal contracts, there’s no offer, acceptance, or mutual consent. Instead, the obligation is imposed by law to ensure fairness. When one party benefits unjustly from another’s actions or property, the law steps in to prevent unjust enrichment, holding the benefiting party responsible, even though they never agreed to a formal contractual relationship.
- Based on Principles of Equity and Justice
Quasi contracts are rooted in the principles of equity, justice, and good conscience. They aim to prevent one person from unfairly gaining at the expense of another. The law recognizes that even without formal agreements, fairness requires certain obligations to exist. For example, if someone receives goods or services by mistake, they are legally bound to return or pay for them, ensuring they do not profit unfairly from someone else’s loss or mistake.
- Statutory Recognition
Under the Indian Contract Act, 1872, Sections 68 to 72 specifically recognize quasi contracts. These sections lay down situations where obligations arise without formal contracts. The law covers cases like supplying necessities to someone incapable of contracting, payment by an interested party, or goods or money received by mistake. The statutory framework gives legal backing to the concept of quasi contracts, allowing courts to enforce such obligations as if they were actual contracts.
- Prevention of Unjust Enrichment
A key feature of quasi contracts is preventing unjust enrichment. This means that no one should retain a benefit unfairly at another person’s expense. If such a situation arises, the law imposes a duty on the enriched party to compensate the other. For example, if person A mistakenly pays B’s debt, B is legally required to repay A, even though there was no contract between them. This prevents unfair gain and restores balance.
- Compensation Instead of Enforcement
Quasi contracts don’t arise from promises; rather, they create a right to compensation. The focus is on reimbursing or compensating the party who has suffered a loss or provided a benefit, not on enforcing performance of promises. For instance, if a finder of lost goods spends money to preserve them, they can claim reimbursement. The obligation is to pay fair compensation, not to fulfill any agreed terms, as no promises exist.
- Legal Fiction of Contract
The term “quasi contract” itself implies a legal fiction — the law pretends that there is a contract where none exists. Courts impose obligations “as if” a contract was formed, even though there was no intention or agreement. This fiction allows the courts to deliver justice in cases where technical requirements of a contract are missing but fairness demands compensation or restitution. Essentially, the law creates an imaginary contract to impose liability.
- Not Based on Consent
Unlike regular contracts that are built on mutual consent and intention, quasi contracts operate entirely without the consent of the parties. One party may not even know they are benefiting at another’s expense. For example, if a supplier mistakenly delivers goods to the wrong address, the recipient must pay or return them even though they never agreed to the supply. The law steps in to correct the unfairness without requiring prior agreement.
- Remedy is Restitution
The remedy under quasi contracts is generally restitution — returning what has been unjustly gained or compensating for it. The aim is not to punish but to restore the injured party to the position they were in before the unjust enrichment. Courts order the enriched party to pay back or restore the benefit received, ensuring no one profits unfairly. This distinguishes quasi contracts from damages awarded under breach of formal contracts.
Essentials of Quasi Contracts:
- Existence of a Legal Duty
For a quasi contract to arise, there must be a legal duty imposed by law—not by agreement—on one party to compensate another. This duty is created when one party has been unjustly enriched or benefited at the expense of another. Unlike standard contracts, this duty arises regardless of the intention or consent of the parties. The focus is on ensuring fairness and preventing one party from unfairly profiting or escaping liability.
- Absence of a Formal Agreement
A fundamental essential is that there is no formal contract or agreement between the parties. Quasi contracts are not based on offer, acceptance, or mutual intention; instead, they arise purely by operation of law. Even if the parties never interacted or intended to form a contract, the law treats the situation as if a contract existed to prevent unfair gains. This distinguishes quasi contracts from regular, consensual contracts.
- One Party Should Be Enriched
There must be a situation where one party receives some benefit, gain, or enrichment, directly or indirectly, from another party. This enrichment could be in the form of money, goods, or services. Importantly, the enrichment must not have a legal basis, meaning the enriched party has no rightful claim to retain it. Without this unjust enrichment, no obligation under a quasi contract arises, as fairness would not demand compensation.
- At the Expense of Another Party
The enrichment or benefit enjoyed by one party must come at the cost or loss of another. It is not enough that someone benefits; that benefit must have caused detriment or loss to the other party. For instance, if person A mistakenly pays person B’s debt, B has been enriched at A’s expense. The law recognizes that A should be compensated because their resources were wrongly used to benefit B.
- Unjust Enrichment
The enrichment must be unjust or unfair. If the party receiving the benefit has a valid legal reason or contractual right to retain it, no quasi contract arises. The core of quasi-contractual obligations is to prevent unjust enrichment, where retaining the benefit would violate principles of fairness and equity. Courts assess whether keeping the benefit would be morally or legally wrong, and only then impose the obligation to compensate.
- Obligation to Pay Compensation
The primary remedy in a quasi contract is not the enforcement of specific performance or fulfillment of terms, but rather compensation or restitution. The party who has been unjustly enriched must return the benefit or its monetary equivalent to the injured party. The obligation to compensate arises directly under law, even though no agreement was made, ensuring that no one retains what does not rightfully belong to them.
- Legal Relationship Created by Law
Although no contractual relationship is formed by consent, a legal relationship is still created by operation of law under quasi contracts. This legal relationship binds the parties as if a real contract existed, allowing the aggrieved party to seek remedies in court. The law effectively steps in to simulate a contractual bond, ensuring that justice is served and that obligations are enforced, even without traditional contractual foundations.
- Enforceable in Court
Quasi contracts are fully enforceable in court under the Indian Contract Act, 1872 (Sections 68–72). If one party refuses to fulfill the obligations arising from unjust enrichment, the aggrieved party can take legal action to recover the owed compensation. Courts treat these obligations with the same seriousness as actual contracts, upholding the principle that no one should benefit unfairly at another’s expense, even without a written or spoken agreement.
Types of Quasi Contracts under Indian Law:
- Supply of Necessaries (Section 68)
When a person supplies necessities (like food, clothing, shelter, or medicine) to someone incapable of contracting, such as a minor or a person of unsound mind, the supplier is entitled to reimbursement from that person’s property. Even though there is no formal agreement, the law imposes a duty to pay for essential supplies. This ensures that vulnerable individuals are protected without allowing suppliers to suffer unfair losses for providing basic needs.
- Payment by Interested Person (Section 69)
When one person pays money that another is legally bound to pay, the paying party can recover the amount from the person who was originally liable. For example, if A pays B’s property tax to prevent its sale (even though A is not bound to pay), A has the right to recover that amount from B. This type of quasi contract exists to protect those who act in good faith to protect another’s interests.
- Liability to Pay for Non-Gratuitous Acts (Section 70)
If a person lawfully performs an act or delivers something to another, not intending it as a gift, and the other party enjoys the benefit, the recipient must compensate for it. For example, if A mistakenly delivers goods to B, and B uses them, B must pay for the benefit received. This provision prevents unjust enrichment where one party enjoys benefits from another’s efforts or resources without paying fairly.
- Finder of Goods (Section 71)
A person who finds someone else’s lost goods and takes them into their custody becomes bound by certain responsibilities, similar to that of a bailee. The finder must take reasonable care of the goods, and if they return the goods to the rightful owner, they can claim compensation for expenses incurred. This quasi-contractual obligation ensures that finders do not exploit lost property but are also not left unrewarded for their efforts.
- Money or Goods Delivered by Mistake or Coercion (Section 72)
If someone receives money or goods by mistake (either of law or fact) or under coercion, they are bound to return it. For example, if A mistakenly pays B twice for the same invoice, B must refund the extra payment. This provision ensures that no one unjustly retains money or goods that were not intended for them, maintaining fairness in financial and commercial dealings and avoiding wrongful enrichment.
- Quantum Meruit Claims
Though not explicitly named in Sections 68–72, quantum meruit (meaning “as much as is earned”) is recognized under Indian law. It applies when a contract is partially performed, but cannot be completed due to events beyond control, or when one party prevents completion. The performing party can claim reasonable compensation for the part performed. This protects labor and resources expended, ensuring partial efforts are not wasted without reward.
- Obligations Resembling Those Created by Contract
These are obligations imposed by the law where, even though no formal contract exists, the parties are treated as if they had a contract because justice and fairness demand it. This broad category includes all the statutory quasi contracts mentioned earlier and covers cases like wrongful possession, overpayment, or mistaken delivery. The Indian Contract Act recognizes these obligations to ensure equity, preventing one party from unfairly benefiting at the expense of another.
- Bailee-like Obligations without a Contract
Sometimes, one party takes control of another’s property (for example, by accident or necessity), and the law imposes bailee-like responsibilities. This means the person must take reasonable care, not misuse the goods, and return them safely. Even if no agreement was signed, the law treats the situation as if a bailee contract existed. This prevents negligence or exploitation, ensuring responsible handling of others’ property under quasi-contractual obligations.
Importance of Quasi Contracts:
- Prevent Unjust Enrichment
Quasi contracts are crucial in preventing unjust enrichment, where one party benefits unfairly at the expense of another without a formal agreement. The law steps in to impose obligations on the beneficiary to compensate or return benefits received, maintaining fairness and justice between parties and ensuring no one profits undeservedly.
- Fill Gaps Where No Formal Contract Exists
Often, parties act in situations lacking a formal contract. Quasi contracts fill this gap by legally imposing duties to avoid exploitation, protecting parties who have rendered services or supplied goods without explicit agreements but with reasonable expectations of compensation.
- Promote Equity and Fairness
Quasi contracts embody principles of equity by ensuring fairness in dealings where strict contract law might fail. They enable courts to correct situations where legal rights or obligations aren’t explicitly spelled out but fairness demands compensation or restitution.
- Protect Vulnerable Parties
These contracts safeguard parties unable to contract, such as minors or persons of unsound mind, by ensuring those who supply necessities or incur expenses on their behalf can recover costs. This protection balances vulnerabilities and responsibilities in society.
- Encourage Trust and Cooperation
By assuring recovery or restitution even without formal contracts, quasi contracts encourage individuals and businesses to act fairly and cooperatively, fostering trust in commercial and social interactions where formal contracts may not always be feasible.
- Avoid Litigation Complexity
Quasi contracts simplify resolving disputes by providing clear legal remedies based on fairness rather than complex contract formalities. This reduces legal battles and expedites settlements, saving time and resources for parties and courts.
- Uphold Moral Obligations through Legal Means
Quasi contracts turn moral obligations into enforceable legal duties. When one party benefits from another’s efforts or property, the law mandates performance to honor societal norms of good faith and justice beyond mere contractual terms.
- Promote Efficiency in Commerce
In commercial transactions, quasi contracts prevent delays caused by absent or incomplete agreements by providing immediate remedies. This efficiency supports smoother business operations and economic stability by protecting parties acting in good faith.
- Provide Legal Framework for Specific Situations
Indian Contract Act outlines quasi contracts covering specific scenarios like supply of necessaries, payment by mistake, or non-gratuitous acts. This framework guides parties on their rights and obligations, reducing uncertainty and fostering orderly conduct.
- Facilitate Recovery of Expenses and Services
Quasi contracts enable parties to recover expenses or value of services rendered even without a formal contract, ensuring no one unfairly bears the cost of another’s benefit. This encourages fairness in personal and commercial relationships.
