Key Takeaways

  • Quasi contracts are legal obligations imposed by courts to prevent unjust enrichment when no actual contract exists.
  • Common types of quasi contracts include payment by an interested person, obligation to pay for non-gratuitous acts, and liability for receiving something by mistake or coercion.
  • Additional recognized types include obligations of a finder of goods and responsibilities in situations of "negotiated impossibility."
  • Quasi contracts differ from express and implied contracts, as they are imposed by law rather than agreed upon.
  • These obligations ensure fairness and equitable remedy in the absence of mutual consent.

Quasi-contract types are when one party has an obligation to another party that's imposed by the law and separate from the agreement between the two parties. If one person isn't capable of entering into a contract, the supplier can recover the property's price from the incapable person.

Quasi Contract Type: Payment by an Interested Person

Someone who's interested in monetary payment from another person who's bound by law to pay them is entitled to be reimbursed by the other person. For example, if a consignee had a fire in their vehicle during transit and suffered loss, the insurer can claim the loss so they can get compensated.

Quasi Contract Type: Obligation to Pay for Nongratuitous Act

If a person does something under the law for another person or delivers them something without having the intention of doing it gratuitously, the receiver is bound by law to pay the giver for delivering their product or service. If a tradesperson accidentally leaves their goods at another person's house, that person can't treat them as their own unless they pay for them. According to Section 71 of the Indian Contract Act 1872, someone who finds goods that don't belong to them and takes them has similar responsibilities as a bailee.

This section states that anyone who receives something that was delivered under coercion or by accident needs to return or repay it. For example, say a railroad company won't deliver specific goods to a consignee except if they get paid for the illegal charge of the carriage. The consignee will then pay the sum that was charged to receive the goods that he's estimated to recover, which means many of the charges were illegal.

Quasi Contract Type: Responsibility of Finder of Goods

A person who finds goods belonging to someone else and takes them into their custody has a legal obligation akin to that of a bailee. This means the finder must take reasonable care of the goods and attempt to return them to the rightful owner. The finder cannot treat the items as their own and may be required to compensate the owner for any loss or damage due to negligence. This type of quasi contract ensures that the rights of the original owner are protected, even in the absence of an agreement.

Quasi Contract Type: Liability for Receiving Goods or Money by Mistake or Coercion

When a person receives money, goods, or services by mistake or under coercion, the law imposes a duty to return the benefit or provide compensation. This principle is rooted in equity and aims to prevent unjust enrichment. For example, if a utility company mistakenly credits a customer with funds or services they didn’t pay for, the customer is legally obligated to repay or return the benefit. Section 72 of the Indian Contract Act reinforces this type by clearly stating that a person to whom money has been paid, or anything delivered by mistake or under coercion, must repay or return it.

What Is a Contract?

There are three different types of business contracts, which include the following:

  • Implied contracts
  • Quasi-contracts
  • Express contracts

A contract is an agreement that's legally enforceable between two or more parties. It's often a written document, but it can also be verbal in some cases. Written contracts are the method that's preferred since they offer the most legal protection to both parties. Some contracts need to be in writing, such as sales agreements, business contracts, and lease agreements. Express contracts can be either an oral or written agreement between the two parties. They can also be formed orally if a written agreement isn't necessary according to the statute of frauds.

What Are Implied Contracts?

Implied contracts are based on the conduct of the parties. If one or more parties have an intent to enter into the agreement, the contract can be implied even if there's no oral or written agreement. Implied contracts aren't any less binding than express contracts are.

What Are Quasi-Contracts?

A quasi-contract is a type of contract and acts to have the same results as a regular contract does, but it's not considered a contract in the traditional sense. Instead, this is formed by the court so unjust enrichment can be avoided. These are often used in situations where there's no implied or express contract that will cause an unjust result. It is a form of equitable relief and lets the plaintiff recover the value that a defendant might not be obligated to pay otherwise. This contract is formed by a court order instead of an agreement the parties make.

The contract will become a quasi-contract when there aren't any official agreements between the parties when it comes to payment disputes over services or goods. The goal in creating these contracts is to prevent a party from benefiting from a situation when they shouldn't. This type of contract can offer less recovery than a regular contract, however. This is due to a traditional contract having their agreement terms laid out with both parties agreeing to them, even if it is just a verbal agreement.

In a quasi-contract, there will be just enough recovery to prevent a party from being unjustly riched. In a regular contract, a party can recover everything they're entitled to, in addition to labor costs or other materials needed to complete the project that was originally agreed upon, but that's it.

Examples of Quasi Contract Situations

Here are common scenarios where quasi contracts may be applied:

  1. Emergency medical treatment: A person rendered unconscious in an accident receives medical care. Even without prior consent, they may be liable to pay for the services received.
  2. Mistaken payment: One party accidentally transfers money to the wrong bank account. The recipient must return the amount.
  3. Unauthorized repairs: A neighbor mistakenly fixes the wrong fence, believing it to be theirs. The benefited party may be required to pay for the reasonable value of the repairs.
  4. Finder of lost items: Someone who picks up a lost watch is required to safeguard it and return it to the owner.

These examples illustrate how quasi contracts promote fairness by ensuring that benefits conferred are properly compensated.

Key Characteristics of Quasi Contracts

Quasi contracts share the following defining features:

  • No mutual consent: They arise without agreement between the parties.
  • Court-imposed obligations: The duty is imposed by a court to enforce fairness.
  • Prevention of unjust enrichment: Their purpose is to prevent one party from being unjustly enriched at another’s expense.
  • Enforceable by law: Even without a formal contract, the obligation is legally binding.
  • Compensatory in nature: The remedy typically involves restitution, not punitive damages.

These characteristics distinguish quasi contracts from implied or express contracts, which require mutual consent and are based on the conduct or communication between parties.

Frequently Asked Questions

  1. What are the main types of quasi contracts?
    They include payment by an interested person, obligation to pay for non-gratuitous acts, finder of goods, and receiving goods by mistake or coercion.
  2. How is a quasi contract different from an implied contract?
    A quasi contract is imposed by law without consent, while an implied contract arises from the conduct of the parties.
  3. Is a quasi contract legally enforceable?
    Yes. Although it is not a traditional contract, it creates enforceable obligations to ensure fairness.
  4. Can a quasi contract involve compensation?
    Yes. Courts typically award compensation equivalent to the value of the benefit received to prevent unjust enrichment.
  5. What is the purpose of quasi contracts?
    The primary purpose is to prevent one party from being unfairly enriched at the expense of another when no actual contract exists.

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