Quasi-Contractual Obligations under the Indian Contract Act, 1872

Quasi-Contractual Obligations under the Indian Contract Act, 1872
26 September 2020

Quasi-Contractual Obligations under the Indian Contract Act, 1872

Under the Indian Contract Act, certain obligations are not in actual contracts because they lack one or the other essential elements of a contract, but are still enforceable in a court of law. Such obligations are known as quasi-contractual obligations.

English Law has identified quasi-contractual obligations firstly, the framers of the Indian Contract Act altered and amended it and placed it in the Act as certain relations resembling those created by contracts. Thus the elements that are placed in the English Quasi-contract are also found in that of the Indian Contract Act.

However under the Indian Contract Act, 1872 a quasi-contract is not defined. However, a quasi-contract may be defined as, “a transaction in which there is no contract between the parties; the law creates certain rights and obligation between them which are similar to those created by a contract.”

Quasi-contracts are based on the principle of "Nemo debet locupletari ex aliena jactura" by which I meant that, "No individual should grow rich out of another individual loss". Thus, in the case of quasi-contractual obligations, the liability is based on the principle of unjust enrichment. It means that no individual should get unjustly enriched at the cost of another individual's loss. By which is meant no individual should profit anything unjustly, when his gaining such a thing may mean a loss for another individual.

There are various situations in which justice as well as law, requires that a particular individual is required to confirm an obligation, however, he has not committed any tort nor broken any contract. For instance for Quasi Contract would be worthy of Quoting for the finer understanding of Quasi Contract, if an individual in whose home-specific goods have been left by mistake is bound to restore them.

The essential features of a Quasi Contract are the following:

  1. It is normally a right to the money and is generally but not always to a liquated amount of money
  2. The right is not a result of an agreement but is inflicted by law.
  3. The right is not accessible against everyone but only against a particular individual. Thus it is like a contractual right.

The Indian Contract Act, 1872 under section 68 to 72 provides five kinds of Quasi-contractual obligations.

Kinds

There are five essential kinds of quasi-contractual obligations which are the following as under:

  1. Claim for necessaries supplied to person incapable of contracting, or on his account(section 68): Necessities are supplied to persons who are not competent to contract. The supplier is allowed to recover the amount from the property of the incompetent individual. A Minor, who is a person of unsound mind and an individual who is disqualified by law comes under the purview of an incompetent person under the Indian Contract Act, 1872.
  2. Reimbursement of person paying money due by another, in payment of which he is interested(section 69): If an individual ‘’D’’ pays something in someone’s place ‘‘B’’, that which the person B is himself ‘bound by law’ to pay, D will be reimbursed by B. Please note that D should be ‘interested’ in this payment. It is a case of implied indemnity. For example, Ram is a Zamindar. Shiv holds one of his lands on lease in Haryana. The revenue of Ram’s land is payable to the government in arrears. So, the land ends up being advertised for sale by the government. As per the Revenue Law, if the land is sold, it will end Shiv’s lease. To prevent this sale, Shiv pays Ram’s dues to the government. Ram is bound to pay back to Shiv. The abovementioned example fulfills the following conditions which are as under:
    1. The party paying the other party’s dues is interested in the payment.
    2. The party whose payment is due was bound by law to pay.
  3. The obligation of a person enjoying the benefit of the non-gratuitous act(section 70): For instance, an individual does something for someone gratuitously without the intent to do so and the other individual takes the benefit. In this case, section 70 creates an obligation on the individual enjoying the benefit of a non-gratuitous act or for the goods received. He is liable to pay compensation or if possible to restore the thing delivered or done. However, in this case, the individual has to prove that
    1. The act is done or goods delivered were legal
    2. It was not done gratuitously
    3. The other individual obtained the benefit.
  4. Responsibility of finder of goods(section 71): Usually, an individual who finds goods belonging to another individual is known as bailee. He is the keeper of the goods found and he has specific rights and duties which involve returning the goods to the real owner. The responsibility of the custodian of the goods are as under:
    1. He has to take reasonable care of the goods found
    2. He Cannot appropriate the goods
    3. Mix the goods with his goods
    4. Restoring the goods to the owner
  5. Liability of person to whom money is paid or thing delivered by mistake or under coercion(section 72): If anyone receives goods or money by under coercion or mistake, then that person is liable to return or repay it to the owner. For example, Ram and Sham rented a house together and they share the rent. Ram pays the whole rent to the landlord without the knowledge that it was already paid by Sham. Here, Ram is allowed to be reimbursed by the landlord. If the sum of money is paid by coercion then also it is recoverable.