Quasi Contract

Nature of quasi contract 

Chapter V (section 68 to 72) of Indian contract act deals with certain relations resembling those created by contracts. it incorporates those obligations which are known as quasi contracts under the English law. in many situations, a person is obliged to compensate another although the basis of this obligation is neither a contract between the parties nor any tort on the part of the person who is bound to compensate. the basis of this obligation is that no one should have unjust enrichment at the cost of another.

An action for a quasi contract resembles a contractual action insofar as such an action is against a certain person or certain persons, who have got the unjust benefit. Such an action is for a liquidated sum of money.

The theory on which quasi contractual obligation is based is not yet finally settled. Lord Mansfield, considered to be the real founder of such obligations, explained them on the principle that law as well as justice should try to prevent unjust enrichment I.e. enrichment of one person at the cost of another.

Indian contract act deals with the following quasi contractual obligations:-

  • claims for necessaries supplied to a person incompetent to contract [ section 68]
  • reimbursement of money paid, due by another [ section 69]
  • Obligation of person enjoying benefit of non gratuitous act [section 70 ]
  • Responsibility of finder of goods [section 71]
  • Liability of a person getting benefit under mistake or question [section 72]

Section 68

This principle has been discussed under capacity to contract

Section 69

The principle of the section is that when a person is bound to make a payment, and another person, though not bound is interested in the payment being made and pays up to safeguard his interest, he is entitled to reimbursement from the person who was initially liable to pay stop the conditions of liability under this section can be stated as:-

  • The plaintiff should be interested in making the payment. The interest which the plaintiff seeks to protect must be legally recognizable. His honest belief that he has an interest to protect is enough.
  • It is necessary that the plaintiff himself should not be bound to pay. he should only be interested in making the payment in order to protect his own interest. Bear person is jointly liable with others to pay, a payment by him of the others share would not give him a right of recovery under this section.
  • The defendant should have been bound by law to pay the money. It is not necessary that the liability is only statutory.
  • Lastly, the plaintiff should made the payment to another person and not to himself.

Where a certain government was the tenant of a land and paid to himself out of the rent due to landlord arrears of land revenue due to itself, the government could not recover from the landlord. It was a transfer of money from one head to another within the government and not payment to another and though it was done to save the land from being sold in execution, it did not come within the principal of the section.

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Section 70 

Obligations of persons enjoying benefit of non-gratuitous act.

Ingredients

  • Lawful doing/delivering: In Indu Mehta vs State of Uttar Pradesh, Indu Mehta an advocate, was appointed as Assistant Director, Government Counsel in pursuance whereof she rendered her services. The appointment was howeverfound to be void in view of Cr.P.C, Section 24(2). Held that though the said appointment was void, since the State had enjoyed the benefits thereof, the Government was not entitled to recover back the fees already paid to her for her services.
  • No intention to do the act gratuitoiusly.: State of West Bengal vs B.K. Mondal & Sons- The plaintiff, on the request of an officer of the State of West Bengal constructed a Kutcha road, guardroom, office, kitchen, room for clerks and storage sheds for the use of the civil supplied Department of the Government. The contact had been concluded in accordance with the requirements of Section 175(3) of the Government of Infia Act, 1935 (now article 299 of the Constitution of India). The contractor was thus forced to try his luck with the State under section 70, and it proved to be better than that of the State but at the cost of fighting up to the Supreme Court for a sum of Rs. 19325.

The State was held liable because instead of rejecting the services it had enjoyed the benefits of them. The argument that the contract in question wasnot made in accordance with the requirements of the Constitution was got over by holding that those requirements apply only to contractual obligations and not those arising under quasi-contract. The Court also laid down that the position of the State cannot be compared with that of a minor. “The minor is excluded from the operation of Section 70 for the reason that his case has been specifically provided for by Section 68. What Section 70 prevents is unjust enrichment and it applied as much to corporations and Government as to individuals. Besides, in the case of minor, even the voluntary acceptance of the benefit of the work done or thing delivered, which is the foundation of the claim under Section 70, would not be present and so, on principle, Section 70 cannot be invoked against a minor”

Damodara Mudaliar vs Secretary of State for India– A number of villages were drawing irrigation waters from a tank. Some of the villages were under direct State tenancy, others under Zamindars. The Government carried out repairs to the tank for its preservation. The Zamindars also enjoyed the benefits of the repeairs. They were accordingly held liable to make proportional contribution towards the expensed of repair. The case shows that even where the party making payment or rendering services is personally interested in the matter, he can recover proportional contribution from those who have enjoyed the benefits of his services

  • Enjoyment of benefit by the defendant is necessary. The voluntary acceptance of the benfit of the work done or the thing delivered is the foundation of the claim under Section 70.

Application of Section 70 against government.

Section 70 permits unjust enrichment and it applies as much to individuals as to corporations/Government. If the services rendered or goods supplied to the Government are under s purported contract, which does not maintain by way of non-fulfillment of the formalities prescribed in Article 299, the government would still be held liable to compensate for the same under Section 70, ICA, if it has enjoyed the benfit of what has been done under the purported contract.

Recovery under Section 70 is possible even if no contract was there or the contract was void under Section 299. Payment for extra work done without any agreement, has been allowed to be recovered under this section.

Section 71- Responsibility of finder of goods

Finder is treated at par with bailee in terms of duties and liabilited. By statutory fiction, contract of bailment is inferred between a finder of goods is similar to that of bailee, like a bailee of goods he is bound to take as much care of the goods as a man of ordinary prudence would under similar circumstances, take of his own goods of the same bulk, quantity and value as the goods found by him. Similarly, he should not mix the goods to the true owner, if he can, after a reasonable search be found. If, because of his (finder’s) own default, the goods are not returned to he true owner, or there is any loss, destruction or deterioration of the goods, the finder must compensate the owner for the same. Under Section 169 ICA, the finder of the goods has the power to sell them.

Section 169 of Indian Contract Act:-

When finder of thing commonly on sale may sell it.—When a thing which is commonly the subject of sale is lost, if the owner cannot with reasonable diligence be found, or if he refuses upon demand, to pay the lawful charges of the finder, the finder may sell it— —When a thing which is commonly the subject of sale is lost, if the owner cannot with reasonable diligence be found, or if he refuses upon demand, to pay the lawful charges of the finder, the finder may sell it—”

(1) when the thing is in danger of perishing or of losing the greater part of its value, or

(2) when the lawful charges of the finder, in respect of the thing found, amount to two-thirds of its value.

Finder’s right of lien and compensation:

The finder of the goods has no right to sue the owner for compensation for the expenses voluntarily incurred by him to preserve the goods and to find out the owner, but he may retain the goods against the owner under he recovers such compensation and when the owner has offered a specific reward for the return of goods lost, the finder may sue for such reward and may retain the goods until he receives it. Even if no specific reward has been offered, but if after the goods are found, the owner promises to pay something to the finder for his service the finder can enforce this promise under Section 25(2).

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