TOPIC: QUASI CONTRACT, COERCION, FRAUD

UNDER THE GUIDANCE OF: PROF DEVESH JOSHI.

SUBMITTED BY:-
NAME: RAJRATNA GROROBAJI DONGARGAONKAR
CLASS :T.Y-B.L.S-L.L.B
ROLL NO:20514
D.O.S: 10/10/2022

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 INDEX

SR.NO TOPIC PG.NO

1. INTRODUCTION 3

2. QUASI CONTRACT 4

3. FEATURES OF QUASI CONTRACT 5

4. TYPES OF QUASI CONTRACT 6
5. HISTORY OF QUASI CONTRACT 8

6. COERCION 9

7. ESSENTIALS OF COERCION 10

8. EFFECT OF COERCION IN CONTRACT 12

9. FRAUD 13

10. CONSTITUTES OF FRAUD 14

11. ESSENTIALS OF FRAUD 17

12. CONSEQUENCES OF FRAUD 20

13. CONCLUSION 21

14. BIBLIOGRAPY 22

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 INTRODUCTION

The word ‘Quasi’ means pseudo. Hence, a Quasi contract is a pseudo-contract.

When we talk about a valid contact we expect it to have certain elements like offer
and acceptance, consideration, the capacity to contract, and free will. But there are
other types of contracts as well. There are cases where the law implies a promise
and imposes obligations on one party while conferring rights to the other even
when the basic elements of a contract are not present. These promises are not legal
contracts, but the Court recognizes them as relations resembling a contract and
enforces them like a contract. These promises/ relations are Quasi contracts. These
obligations can also arise due to different social relationships which we will look
at in this article. The core principles behind a Quasi Contract are justice, equity
and good conscience. It is based on the maxim: “No man must grow rich out of
another persons’ loss.”

Coercion is the act or process of persuading someone forcefully to do

something that they do not want to do.

“Fraud” under section 17 of the Indian contract act, has been defined to
include false representation of a material fact related to the contract—regardless
of whether by words or by conduct, by bogus or misleading allegations, or by
non-disclosure of what ought to have been revealed—that is intended to deceive
and deceives the other in such a way that the person acting on such
misrepresentation, acts to his own injury. Furthermore, it includes promises
made without the intent of performing them and any other act/omission declared
fraudulent by law.

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 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.
A quasi contract is also known as an implied contract. It would be handed
down ordering the defendant to pay restitution to the plaintiff. The restitution,
known in Latin as quantum meruit, or the amount earned, is calculated
according to the amount or extent to which the defendant was unjustly
enriched.
These contracts are also referred to as constructive contracts as they are created
when there is no existing contract between the two parties involved. If there is
an agreement already in place, though, a quasi contract generally cannot be
enforced.1

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 FEATURES OF A QUASI CONTRACT

1. It is usually a right to money and is generally (not always) to a liquated sum

of money

2. The right is not an outcome of an agreement but is imposed by law.

3. The right is not available against everyone in the world but only against a
specific person(s). Hence it resembles a contractual right.

Sections 68 – 72 of the Indian Contract Act, 1872 detail five circumstances under
which a Quasi contract comes to exist. Remember, there is no real contract
between the parties and the law imposes the contractual liability due to the
peculiar circumstances.

*Section 68 – Necessaries Supplied to Persons Incapable of Contracting

*Section 69 – Payment by an Interested Person
*Section 70 – Obligation of Person enjoying the benefits of a Non-Gratuitous
Act
*Section 71 – Responsibility of Finder of Goods
*Section 72 – Money paid by Mistake or Under Coercion2

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 TYPES OF QUASI CONTRACT

1. Supply of Necessities to Incapable Persons (Section 68):

If a man or woman is incapable of entering into a contract, or all people whom

he is legally sure to support is supplied by means of any other person with
necessaries, applicable to his condition in life, the man or woman who has
furnished such resources is entitled to be reimbursed from the property of such
an incapable person.

2. Payment by Way of a Fascinated Character (Section 69):

According to section 69, an individual who is willing in a monetary fee that

anyone else is bound to pay, and who, as a result, may pay it, is entitled to
compensation from the other.

3. Obligation to Pay Gratuitous Non-Acts (section 70):

According to section 70, when a person lawfully does or gives you something
for the other, no longer intending to do so gratuitously, and the person derives
any gain from it, he is responsible for compensating or fixing the factor so done
or delivered.

4. Responsibility of Finder of Goods (section 71):

According to section 71, a man or woman who finds goods of someone else and
takes them into his custody is a concern to identical accountability as the bailee
is sure to take a lot care of the items as a man of everyday prudence would.

In addition to that, he ought to make efforts to trace the owner. If not, he will be
responsible for one-sided conversation. Until the proprietor is observed, the
property will vest with the finder; he can sell in case items are perishable, the
owner cannot be found, the proprietor refuses to pay for the legal fees etc.

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5. Payment of Delivery via Mistake or Coercion (section 72):

“Liability of individuals to whom cash is paid, or issue delivered by way of

mistake or coercion.” It is the capacity of the liability of the person to whom
cash is paid or matters delivered by using mistakes or beneath coercion, to repay
the money or return the goods to the proper owner.3

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CONTACT-1 (General Principles) by Dr. S. R. Myneni published by:S. P. GOGIA(H.U.F) C/o. ASIA LAW HOUSE

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 HISTORY OF QUASI CONTRACT

Under common-law jurisdictions, quasi contracts originated in the Middle Ages

under a form of action known in Latin as indebitatus assumpsit, which
translates to being indebted or to have undertaken a debt. This legal principle
was the courts' way of making one party pay the other as if a contract or
agreement already existed between them. So the defendant’s obligation to be
bound by the contract is seen as implied by law. From its earliest uses, the
quasi contract was typically imposed to enforce restitution obligations.

The form of action known as indebitatus assumpsit came to include various sub-
forms known as the common money counts.

The most important of these for the later development of the law of quasi-
contract included:

(i) actions for money had and received to the plaintiff's use;
(ii) actions for money paid to the defendant's use;
(iii) quantum meruit;
(iv) quantum valebant

Quasi-contractual actions were generally (but not exclusively) used to remedy

what would now be called unjust enrichment. In most common law jurisdictions
the law of quasi-contract has been superseded by the law of unjust enrichment.4

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 COERCION

‘Coercion’ is the committing, or threatening to commit, any act forbidden by

the Indian Penal Code (45 of 1860) or the unlawful detaining, or threatening to
detain, any property, to the prejudice of any person whatever, with the intention
of causing any person to enter into an agreement."

Explanation.—It is immaterial whether the Indian Penal Code (45 of 1860) is

or is not in force in the place where the coercion is employed. Illustrations A, on
board an English ship on the high seas, causes B to enter into an agreement by
an act amounting to criminal intimidation under the Indian Penal Code (45 of
1860). A afterwards sues B for breach of contract at Calcutta. A afterwards sues
B for breach of contract at Calcutta." A has employed coercion, although his act
is not an offence by the law of England, and although section 506 of the Indian
Penal Code (45 of 1860) was not in force at the time when or place where the
act was done. A has employed coercion, although his act is not an offence by
the law of England, and although section 506 of the Indian Penal Code (45 of
1860) was not in force at the time when or place where the act was done."5

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LAW OF CONTRACT by AVTAR SINGH and SPECIFIC RELIEF by RAJESH KAPOOR

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 ESSENTIALS OF COERCION

1. Committing or threatening to commit any act-

The first essential element of coercion is a person should commit or threaten to

commit any illegal act to obtain the assent of the other person to enter into a
contract.
The person must use force against the other person to commit any illegal act
against or threaten him by a wrongful way to obtain the consent of that person
to enter into a contract.

2. The act must be forbidden by the Indian Penal Code or Special

Laws-

The act committed by the person or threatening to commit any act which is
illegal as per the Indian Penal Code, or any other Special Laws enforced in the
country.
The person who committed or threatened to commit any illegal act as provided
under the Indian Penal Code or any other Special Laws to obtain the consent of
the person to enter into a contract wrongfully.

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3.Unlawful detaining or threatening to detain any property-
Any person who wrongfully detains another person or threatens to detain the
property of others to obtain the consent of that person to enter into a contract
with that person.

4. With intention of causing any person to enter into a contract-

The last essential element of coercion is intention. The person must all three
above-mentioned elements with intention of causing another person to enter into
a contract.6

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LAW OF CONTRACT by AVTAR SINGH and SPECIFIC RELIEF by RAJESH KAPOOR

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 EFFECT OF COERCION IN CONTRACT

Coercion is the use of force to obtain the consent of another person to enter into
a contract wrongfully, if the agreement is caused under the effect of coercion,
then two possibilities can occur;

1. The person whose consent was obtained due to coercion then has the option
to agree on the forced contract
2. The person whose consent was obtained due to coercion can be challenged
before the court of law, and the agreement can be held as void.

So, the person whose consent was obtained by coercive force has the power to
make the contract valid or void. And, this is the situation of a voidable contract
at the option of one Party.7

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CONTACT-1 (General Principles) by Dr. S. R. Myneni published by:S. P. GOGIA(H.U.F) C/o. ASIA LAW HOUSE

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 FRAUD

‘Fraud’ means and includes any of the following acts committed by a party to a
contract, or with his connivance, or by his agent1, with intent to deceive another
party thereto or his agent, or to induce him to enter into the contract:-

(1) the suggestion, as a fact, of that which is not true, by one who does not
believe it to be true;
(2) the active concealment of a fact by one having knowledge or belief of the
fact;
(3) a promise made without any intention of performing it;
(4) any other act fitted to deceive;
(5) any such act or omission as the law specially declares to be fraudulent.

Explanation:-
Mere silence as to facts likely to affect the willingness of a person to enter into a
contract is not fraud, unless the circumstances of the case are such that, regard
being had to them, it is the duty of the person keeping silence to speak2, or
unless his silence, is, in itself, equivalent to speech.8

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 CONSTITUTES OF FRAUD

Based on the definition of fraud under section 17, the circumstances that constitute
fraud are:

1. ASSERTING FACTS WITHOUT BELIEF IN THEIR TRUTH

“Fraud is proved when it is shown that a false representation has been made –
(1) knowingly, or
(2) without belief in its truth, or
(3) recklessly careless whether it be true or false.”
Therefore intentional misrepresentation is the essence of fraud and it is dealt
with under the first three clauses of section 17.

The ingredients contemplated under this clause of Fraud are –

(a) There should be a suggestion as to a fact,

(b) the fact suggested should not be true
(c) the suggestion should have been made by a person who does not believe it
to be true, and
(d) the suggestion should be found to have been made with intent either to
receive or to induce the other party to enter into the contract in question.

However, if the plaintiff has the means to discover the truth by ordinary
diligence, no fraud is proved.

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 2. ACTIVE CONCEALMENT

Active concealment is a situation where one party conceals material information

related to the contract despite having a duty to disclose such information. In
simpler words, it refers to failure in disclosing private information. It is more
than mere passive concealment, that is to say, it requires an overt act for
concealment. It is crucial to note here that passive concealment referred to
above means silence. The section makes it clear that though mere silence
doesn’t amount to fraud, it may constitute fraud under situations where the party
has a duty to speak or where such silence is equivalent to speech.

3. PROMISE WITHOUT INTENTION OF PERFORMING THE

CONTRACTUAL OBLIGATIONS

What has been contemplated under this clause is that the initial intention of not
performing the promise that is made is a necessary element to constitute fraud
and the existence of such an intention cannot be inferred. The fraud that has
been contemplated under this clause is a one which is at the very inception, a
fraud vitiating the transaction itself and not any subsequent conduct or
representation on the part of the party or his representative. Various types of
situations that fall under this clause include – where a person contracts with
another without the intent to perform, only to prevent the other from contracting
with some third person; contracting without the intending to pay the agreed
consideration; one party promising the other, something which he is certain of
not being able to accomplish in the given contractual period.

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 4. ANY OTHER ACT FITTED TO DECEIVE

Since fraud can be of an infinite variety, it is futile to make an attempt to define

fraud precisely and exhaustively to cater to all the contingencies because it is
highly likely that many loopholes may become available to escape liability.
Human innovation and creativity know no bounds and thus, this clause has been
drafted as a tool to enable the judiciary in doing effective and true justice. This
clause may include all those acts which may be used to trick or cheat someone
by unfair means to cause wrongful loss to the one cheated or wrongful gain to
the one cheating. The intent of the person cheating must be to deceive the other
person.9

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LAW OF CONTRACT by AVTAR SINGH and SPECIFIC RELIEF by RAJESH KAPOOR

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 ESSENTIALS OF FRAUD
Section 17 of the Act defines fraud as –
Section 17 (1) – the suggestion as to a fact of that which is not by one who does
not believe it to be true – is known as SUGGESTIO FALSI or suggestion of
falsehood.
Section 17 (2) – the active concealment of a fact by one having the knowledge
or belief of the fact – is known as SUPPRESIO VERI or suppression of a fact.
Section 17 (3) – a promise made without any intention of performing it. It
means a promise made falsely with the intention of inducing the other party to
make a reciprocal promise and thereby enter into a contract.
Section 17 (4) – any other Act fitted or designed to deceive.
Section 17 (5) – any such act or omission as the law specially declares to be
fraudulent

 Party to the contract –

The Act of fraud must be done –
 By the party to the contract himself
 With his connivance
 Or by his agent

*There must be a false representation or assertion – Section 17 (1)

To constitute fraud there must be conjugation of 2 things –
 A representation or assertion of a fact which is not true and
 The person making such representation or assertion of fact does not
believe it to be true.
This is what is meant by suggestio falsi or suggestion of falsehood coupled with
the knowledge of its falsity.

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 *There must be active concealment of fact – Section 17 (3)
By active concealment of certain facts there is an effort to see that the other
party is not able to know or discover the truth. He is made to believe something
is true whereas that is false. This is known as SUPPRESIO VERI or suppression
of fact purposefully.
The implication of such active concealment is more grave where it is the duty of
the person to disclose – fiduciary relationship.
Illustration -
B having discovered a vein of iron ore in the estate of A adopts means to
conceal and is successful to conceal the existence of the ore from A. through
A’s ignorance he buys that estate at an under value.
It is a voidable contract under Section 2(1) of the Act. So A may cancel the
contract because it is a fraud committed against him by B. the fraud is a fraud of
concealment of fact.

*A promise made without the intention of performing it – Section 17(3)

When a person makes a promise then it is deemed to be an undertaking by him
that he will perform the promise. According to Section 17(3) if there is no such
intention to perform the contract, at the time when the contract was made, it
amounts to fraud.

*Any other Act fitted or designed to deceive – Section 17(4)

This provision is general in nature and is intended to include other means of
trick and unfair means intended to deceive any one other than by means of
suggestio falsi, suppresio veri or a promise made without the intention to
perform it. Under this Section, any such acts will amount to fraud.

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 *Any such acts of omission as the law specially declares to be fraudulent
– Section 17(5)
According to Section 17(5) fraud includes any such acts of omission which
specially declares it to be fraudulent. For instance under the TP Act 1882, under
Section 55 , the seller of immovable property is bound to disclose to the buyer
all material latent defects in the property. Not doing so will amount to fraud.10

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 CONSEQUENCES OF FRAUD

According to Section 19 where a consent to an agreement is caused by fraud ,

the agreement to a contract is voidable at the option of the party whose consent
was so caused by fraud. Until such time it is avoided, the contract is valid.

The party defrauded has the following specific remedies –

· To rescind the contract

· To affirm it

· Rescind and claim for damages

· Enforce principle of restitution

· Sue for specific performance

· If he chooses to rescind the contract he must do so within reasonable time.

When the contract is rescinded it becomes void and unenforceable.

· However, if the party chooses, he may affirm it , then the question of

rescinding the contract does not arise and the principle of estoppel will be
revoked against him.11

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CONTACT-1 (General Principles) by Dr. S. R. Myneni published by:S. P. GOGIA(H.U.F) C/o. ASIA LAW HOUSE

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 CONCLUSION
It can be concluded that quasi contracts are no longer contracts as per the Indian
Contract Act 1872. However, several tasks are imposed with the aid of law and
only in favourable situations. Quasi-contracts only create duty so that there is no
unjust enrichment on one party. A quasi-contract exists in the absence of a
written contract. It may additionally be a court docket ordered to keep away
from one party gaining at the fee of another party’s actions. However, the
simple nature and essence of the principle remain identical besides any drastic
change.

It can be said that coercion is one of the major factor which influences the
decision of an individual, it compels him to enter into a contract which
otherwise he wouldn’t. The section also enumerates how a person can
distinguish an act from coercion or not. In case of coercion the burden of proof
lies on the person taking defence of coercion. The reason behind it is that if it
was not so anybody could have approached saying that he has been coerced.

As a result, being unaware of some material information that affects a person's

decision to engage in a contract does not constitute fraud. Silence, on the other
hand, may be considered fraud if it can be proved as speech or if the existing
must inform the other party of the information. Silence can lead to fraud if one
person declines to disclose relevant information, causing harm to the other.
Frauds committed all around the world could be the outcome of a dire financial
situation. The penalty for fraud is now low, and it should be increased to instill
a moral heart in residents so that they are not deceived by the benefits of
deception.

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 BIBLIOGRAPHY
BOOKS :
 CONTACT-1 (General Principles) by Dr. S. R. Myneni published by:S.
P. GOGIA(H.U.F) C/o. ASIA LAW HOUSE
 LAW OF CONTRACT by AVTAR SINGH and SPECIFIC RELIEF by
RAJESH KAPOOR

WEBLIOGRAPHY :

1. https://indiankanoon.org/doc/171398/
2. http://docs.manupatra.in/newsline/articles/Upload/94FBB7C2-
19A0-483D-AE76-9C9BC8A35E4C.pdf
3. https://www.writinglaw.com/fraud-as-per-contract-
act/#:~:text=Under%20section%2017%20of%20the,to%20enter%2
0into%20the%20contract.
4. https://www.investopedia.com/terms/q/quasi-
contract.asp#:~:text=What%20Is%20a%20Quasi%20Contract%20i
n%20Law%3F,the%20expense%20of%20the%20other.

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