The rules regarding quasi-contract govern a contract created by the court for the purpose of equal treatment when two parties are involved in a dispute in which no official agreement exists. The quasi-contract is designed to prevent either party from being unjustly enriched. This is not a legally binding document, but a legal method to impose equity in a dispute used when a contract should have been formed. While an actual contract is often required for a remedy to be sought in court, in some cases a quasi-contract may be sufficient for a party to seek restitution.

Elements of a Quasi-Contract

The three fundamental elements of a quasi-contract include the following:

  • The plaintiff must have provided specific services or valuable goods with a reasonable expectation of being compensated.
  • The defendant must have gotten a direct benefit from knowingly accepting these goods and services.
  • These benefits must be regarded as unfair because no compensation was rendered.

With a legally binding contract, both parties enter the agreement with the intention to make it legally binding prior to exchanging goods or services. With a quasi-contract, one of the parties does not have intent; however, despite the lack of mutual assent, the court has created a quasi-contract to prevent one party from being unfairly enriched. In most cases, damages do not exceed materials and labor costs.

Use of a quasi-contract structure dates to the Middle Ages, when it was called indebtitatus assumpsit. It was used to make one party pay for the product or service as if a contract existed to provide restitution, quite similar to the way the modern quasi-contract is used.

Unjust Enrichment

An unfair benefit, either received by chance or because of the misfortune of another, is legally considered unjust enrichment. This means the party has not earned or paid for the benefit and thus is under an ethical and moral obligation to return it.

To prove unjust enrichment, the three elements above must be present — along with two additional elements:

  • No explanation exists for the enrichment and associated disadvantage.
  • No legal remedy is available to the plaintiff.

Restitution is the typical legal remedy for unjust enrichment. This means the plaintiff will be compensated for the benefit he or she provided, whether by cash value or by returning the item in question.

Quasi-Contract Requirements

Judges can only establish a quasi-contract in certain instances. The plaintiff must have given the defendant a tangible product or service with the reasonable expectation of receiving payment in return. The plaintiff must also provide information about how he or she has been injured and the defendant unjustly enriched. In most cases, the defendant will be ordered by the court to pay the defendant quantum meruit: restitution to the extent that he or she was unjustly enriched. This resolves the dispute.

Quasi-Contract Recovery

This occurs when a plaintiff must be justly compensated even in absence of a contract, if the contract existed but was unenforceable, or a benefit was conferred to the other party without fulfillment of an existing contract. The defendant must have made an express or implied request for this benefit. Quasi-contract recovery is rare in cases in which a contract has been willfully breached, unless the contract in question is for employment.

A buyer who has breached can recover payments made in excess of a liquidated damages clause. If no such clause exists, the individual can recover the lesser of $500 or 20 percent of the contract price. This will be offset by seller damages.

Related Legal Terms and Issues

Other legal terms it's important to understand associated with quasi-contracts include:

  • Appellate court: One with jurisdiction to review lower court decisions.
  • Contract: A legally binding agreement in which a promise is made between two or more parties to provide or do something of value in exchange for a tangible benefit.
  • Defendant: The person or entity against whom a civil court lawsuit has been filed or who is charged with an offense or a crime.
  • Plaintiff: A person who sues another in civil court or criminal proceedings.
  • Remedy: The penalty imposed or right enforced by the court in a lawsuit.

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