AMITY LAW SCHOOL, NOIDA

LAW OF CONTRACT PROJECT

(LAW119)
TOPIC – QUASI-CONTRACT AND ITS OBLIGATIONS

SUBMITTED BY:
NAME: PRATYAKSHA MEHROTRA
PROGRAMME: BBA LL.B. (H)
SECTION: A
ENROLLMENT NO.: A3221522052
SUBMITTED TO: Mr. SANJAY KUMAR
 ACKNOWLEDGEMENT
I would like to express my special thanks of gratitude to my faculty
Mr. Sanjay Kumar who gave me the golden opportunity to do this
wonderful project on the topic Quasi-Contract and its Obligations;
which also helped me in doing a lot of research and I came to know
about so many new things I am really thankful to her.
Secondly, I would also like to thank my parents and friends who
helped me a lot in finalizing this project within the limited time frame.
ABSTRACT
In this project, I reflect on the fundamental characteristics of
obligation understood as a concept with its own distinctive defining
features. This is to say that in this contribution I will argue for an
account of obligation in general, addressing such questions as What is
an obligation? and How can obligation be distinctively characterised?
The account of obligation so provided can then be used as (a) the
fundamental benchmark against which to critically assess the models
of legal obligation currently defended, and as (b) the essential tool
making it possible to move beyond the current debate in legal theory,
putting forward an account of legal obligation irreducible to the ones
presently discussed and superior to them, or so I hypothesise.
INTRODUCTION
There are certain obligations, specified in the Indian Contract Act,
that are not actually contracts because they miss one or the other
elements of a contract, but are still enforceable in a court of law. Such
obligations are called Quasi-contractual obligations. Each of them has
been talked about separately in Sections 68 to 72 (Chapter V) of the
Indian Contract Act, 1872. Let us first look where these obligations
arise from, and then discuss each of them separately.
A quasi-contract refers to the obligation of the contract created out of
order by the court not to let one party get unfair benefit out of the
situation at the expense of other parties where there is the absence of
initial agreement among the parties and there is a dispute between
them.
The obligations arising from a quasi-contract are called quasi-
contractual obligations. It is created by law for the sake of equity and
justice. It is specifically imposed by law on parties because one of the
parties is unjustly enriched. It is a remedy that allows the party to
recover the benefits which were conferred by the other party.
QUASI-CONTRACT
A quasi contract is a retroactive arrangement between two parties who
have no previous obligations to one another. It is created by a judge to
correct a circumstance in which one party acquires something at the
expense of the other.
The contract aims to prevent one party from unfairly benefiting from
the situation at the other party's expense. These arrangements may be
imposed when goods or services are accepted, though not requested,
by a party. The acceptance then creates an expectation of payment.

UNDERSTANDING QUASI-CONTRACTS
Quasi contracts outline the obligation of one party to another when
the latter is in possession of the original party's property. These
parties may not necessarily have had a prior agreement with one
another. The agreement is imposed by law through a judge as a
remedy when Person A owes something to Person B because they
come into possession of Person A's property indirectly or by mistake.
The contract becomes enforceable if Person B decides to keep the
item in question without paying for it.
Because the agreement is constructed in a court of law, it is legally
enforceable, so neither party has to agree to it. The purpose of the
quasi contract is to render a fair outcome in a situation where one
party has an advantage over another. The defendant—the party who
acquired the property—must pay restitution to the plaintiff who is the
wronged party to cover the value of the item.

EXAMPLE OF A QUASI-CONTRACT
A classic quasi contract circumstance may be created by the delivery
of a pizza to the wrong address—that is, not to the person who paid
for it. If the individual at the incorrect address fails to fess to the error
and instead keeps the pizza, they could be seen as having accepted the
food, and thus be obliged to pay for it. A court could then rule to issue
a quasi-contract that requires the pizza recipient to pay back the cost
of the food to the party who purchased it or to the pizzeria if it
subsequently delivered a second pie to the purchaser. The restitution
mandated under the quasi contract aims for a fair resolution of the
situation.

THE PRINCIPLE OF UNJUST ENRICHMENT

Quasi-contracts are based on the principle of “Nemo debet locupletari
ex aliena jactura”, which means ‘No man should grow rich out of
another person’s loss’. Therefore, liability in the case of quasi-
contractual obligations is based on the principle of ‘unjust
enrichment’. It essentially means that no man should get unjustly
enriched at the cost of another person’s loss. That means no person
should gain anything unjustly, when his gaining such a thing may
mean a loss for another person.

FEATURES OF QUASI-CONTRACT
1. Generally, such a right revolves around the right to the money,
be it liquidated sum of money or not.
2. This right is not the consequence of an agreement but it is
rather imposed by law.
3. This right is available against specific persons and is not
available against everyone in this world.

QUASI-CONTRACT IN INDIA
The Indian Contract Act, 1872, does not specifically define quasi-
contract. However, if we look at the law quasi-contracts can be called
a relationship resembling that a contract. Further, we can define quasi-
contracts as a transaction in which there is no contract between the
parties and the law has created certain rights and obligations between
them with is akin to those created under a contract.

QUASI-CONTRACT OBLIGATION
Quasi-contractual obligations under the Indian Contract Act, 1872
The Indian Contract Act, 1872, under sections 68 to 72 provide for
five kinds of quasi-contractual obligations:

1. Supply of necessities [s.68]

It states that a person is not capable of entering into any
contract. Therefore, the supplies are provided to him or anyone
the incapable person is legally bound to support by the third
party. The supplier third party is entitled to recover such
supplier’s price from the unable person’s property.

2. Payment by interested persons [s.69]

It states that if a person is interested in paying money and pays
on behalf of another person, he is bound to pay by the law. So
then, the person who made the payment is entitled to
reimbursement by another party (on behalf of whom he has
paid).

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

It states that the receiving party has enjoyed the same benefits if
a person does anything for the other person lawfully or delivers
something without intending to do the same gratuitously. Then,
such a receiving party is bound to compensate the former party.

4. Finder of goods [s.71]

It states that if a person finds goods that belong to another party
and takes such goods into his custody, then the former has
responsibility the same as that of a bailee.
5. The mistake of coercion [s.72]
It states that if a person has been paid or delivered mistakenly or
under coercion, he must repay or return.

SIMILARITIES BETWEEN CONTRACT AND

QUASI-CONTRACTS

All the results of contracts and quasi-contracts are similar in

nature. In the context of claiming the compensation of the
damages caused to the wronged party, the quasi-contracts are
very similar to the contracts. To support this statement, we can
look at Section 73 of the Indian Contract Act, 1872 which states
the remedies if any type of quasi-contract is breached in
different areas of the Indian Contract Act, 1872.

DIFFERENCES BETWEEN CONTRACTS AND

QUASI-CONTRACTS

A quasi-contract is a fictitious contract that has been pointed out

by law. It is considered a valuable suggestion by law as it is a
cure for the distress of the wronged party which isn’t the case in
express contracts.While talking about quasi-contracts, the
purpose of the parties is not taken under consideration but it is
totally opposite when we talk about express contracts as
discussing the purpose here is a vital process. Without
understanding the intention of the parties, there would be no
contract at all.In the case of a quasi-contract, the entire concept
of the contract revolves around the obligation of the parties as
they are used to identify and shape the terms and conditions of
the contract. On the other hand, the obligations formed are
characterized because of the formation of the contract.
 CASE LAWS

1. In Sales Tax Officer v. Kanhaiya Lai Sara (AIR 1959 SC 135),

it has been held that the money paid under mistake is
recoverable whether the mistake is of fact or of law. And the
term mistake' has been used without any limitation under
Section 72. In this case, a certain amount of sales tax was paid
by a firm under the U.R Sales Tax laws on its forward
transactions. Subsequently to the payment the Allahabad High
Court ruled the levy of sales tax on such transactions to be ultra
vires. The firm sought to recover back the tax money. The
Supreme Court allowed it.

2. In the case of the State of Madhya Pradesh v. Bhailal

bhai(1964), as per Section 74 of the Indian Contract Act, 1872
which covers sales tax under mistake, the Supreme Court held
that, “the government to whom the payment has been made by
mistake must in law repay it” as the respondent paid the tax
under a mistake of law.

3. In Brook’s Wharf v. Goodman Brother’s, the defendant’s

warehoused certain goods, which they had imported from
Russia, with the plaintiffs. The goods were stolen. Under the
(circumstance) law of customs, duty on the goods could either
be recovered, from the owners of the goods from the
warehouseman. The warehouseman i.e. plaintiffs were called
upon to pay the customs duty which the owners of the goods i.e.
defendants were bound to pay. The plaintiffs claimed the
amount of duty paid by them from the defendants. It was held
that they were entitled to recover the same.
4. In Aries Advertising Bureau v. C.T. Devraj, the offended party
advertiser made advertisements for a circus at the instance of the
circus owner. The advertiser was not involved with the
agreement between the financer and the circus owner. The
sponsor brought an activity against the financer to recuperate
promotion costs from the financer. In this case, it was held that
the financer did not enjoy any benefit from the advertisements
and hence the finance could not be made liable to pay under
Section 70.

5. In T.G.M. Asadi v. Coffee Board, it was held that the firm was
made to pay additional taxes under compulsion and duress and
the Coffee Board was directed to return the amount.
CONCLUSION

Generally, a contract consists of an offer and acceptance, which

eventually gives rise to an agreement. The agreement is legally
enforceable becomes a contract. Yet, there are cases wherein the
absence of an agreement the other party is obliged to perform
their duty or obligation. Such obligations are called quasi-
contractual obligations. The whole principle of quasi-contract is
an important part of Contracts law and is very often overlooked
but still, it definitely aids the victim who is unjustly enriched, as
the whole basis of quasi-contract is not based on the intricacies
of the contract but rather receiving justice.
 INDEX

S.NO. PARTICULARS
1. Acknowledgement
2. Abstract
3. Introduction
4. Quasi-Contract
5. Understanding of Quasi-Contract
6. Example of Quasi-contract
7. The Principle of Unjust Enrichment
8. Features of Quasi-Contract
9. Quasi-Contract in India
10. Quasi-Contract Obligation
11. Similarities between Contracts and Quasi-
Contracts
12. Differences between Contracts and Quasi-
Contracts
13. Case Laws
14. Conclusion
.15. References
 REFERENCES

1. www,blog.ipleaders.com
2. www.investopedia.com
3. www.enterslice.com
4. www.wallstreetmojo.com
5. www.wikipedia.com
6. www.northeastlawjournal.com
7. www.legalservice.com