Documente Academic
Documente Profesional
Documente Cultură
SUBMITTED ON:
10th OCTOBER, 2018
DECLARATION
I, Amitesh Deshmukh hereby declare that, the project work entitled, ‘Comparative Study Of
Law Relating To Quasi Contracts In Uk And India’ submitted to H.N.L.U., Raipur is record
of an original work done by me under the able guidance of Dr. Y. Paparao, Faculty Member,
H.N.L.U., Raipur.
Amitesh Deshmukh
Roll No.06
Trimester I
10/10/2018
3
ACKNOWLEDGEMENTS
Thanks to the Almighty who gave me the strength to accomplish the project with sheer hard
work and honesty.
I would like to sincerely thank my faculty for Fundamental Rights Dr Y. Paparao sir for
giving me this topic and guiding me throughout the project. Through this project I have
learned a lot about the aforesaid topic and this in turn has helped me grow as a student.
My heartfelt gratitude also goes out to the staff and administration of HNLU for the
infrastructure in the form of our library and IT lab that was a source of great help in the
completion of this project.
4
TABLE OF CONTENTS
Acknowledgements .................................................................................................................... 2
Objectives .................................................................................................................................. 5
References ................................................................................................................................ 35
Acts/Statutes ........................................................................................................................ 35
Books ................................................................................................................................... 35
Websites ............................................................................................................................... 36
5
RESEARCH METHODOLOGY
This research is descriptive and analytical in nature. Secondary and Electronic resources have
been largely used to gather information about the topic.
Websites, books, journals, articles and reports have been primarily helpful in giving this
project a firm structure.
OBJECTIVES
To study and discuss about position of Quasi contracts under Indian Contracts Act.
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.”
This research project seeks to deal with the law relating to Quasi-contracts in India and United
Kingdom, while discussing the interpretation of the laws by respective judiciary.
7
1.1 CONTRACTS
English Law identified quasi-contractual obligations first, the framers of the Indian Contract
Act modified it and placed it in the Act as- “certain relations resembling those created by
contracts”. Therefore the elements that are present in the English Quasi-contract are also
found in that of the Indian Contract Act.
Though the Indian contract Act, 1872 does not define quasi contract, it calls them relation
resembling those of contracts. 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. “An obligation created by law
for the sake of justice; specif., an obligation imposed by law on parties because of
1
Black’s Law Dictionary,9th Edition, p.365
2
Section 2(h) of Indian Contract Act, 1872
8
relationship between parties or because one of them would otherwise be unjustly enriched.
It’s not a contract, but instead is a remedy that allows plaintiff to recover a benefit conferred
on the defendant.3 These types of contracts are quasi contract or restitution that fall in the
third category of quasi contracts or restitution.4 The procedural term ‘quantum meruit’ has
persisted and is sometimes used inexactly as a synonym for the more general term ‘quasi
contract’ which refers to any money claim for the redress of unjust enrichment. 5 Basically in
other words, a contract made by law for reasons of equity with no statement of consent is a
quasi-contract. Quasi contracts bring a situation which imposes obligations or duties upon the
parties by law rather than the assent given by them to the contract terms.6
There are many situations in which law as well as justice requires that a certain person
be required to confirm an obligation, although he has not broken any contract nor committed
any tort. For example for Quasi Contract would be worthy of Quoting for the better
understanding of Quasi Contract, if a person in whose home certain goods have been left by
mistake is bound to restore them. This shows that a person cannot entertain unjust benefits at
the cost of some other person. Such kind of obligations are generally described, for the want
of better or more appropriate name, as Quasi Contractual Obligations. This would be better
to explain it up that Quasi contract consists of the Contractual Obligation which is entered
upon not because the parties has consented to it but because law does not allow a person to
3
Black’s Law dictionary, 9th Edition, p. 370
4
NallapatiPandruanga Rao v. Vempati Venkateshwara Rao, MANU/AP/1901/2014
5
E. Allan Farnsworth, Contracts $2.20, at 103 (2d ed. 1990)
6
State of Punjab v. Hindustan Development Board, AIR 1960 P H 585
7
218 N.Y. 400, N.E. 337
9
have unjustified benefit at the cost of other party. These are not contracts but these fictional
agreements arise to ensure equity as it would be unfair if a party gets undue advantage at the
cost of other. The liability exists in quasi contracts on the basis of the doctrine of unjust
enrichment. Take for an example a person in whose house certain goods have been left
incidentally, so that person is bound to restore them. There will be an obligation on the house
owner to restore the goods safely that is imposed by law rather than any agreement between
the parties. Such type of contractual obligations are termed as quasi contractual obligations.
Basic elements of quasi contracts are:
1.2.1 Liability
In general, the quasi contract doctrine is applied in disputes regarding payment of goods
delivered or services rendered. If there is no valid contract between the parties, the main
question that arises in such situations is the liability of the defendant. As the aim of this
doctrine is to prevent unjust enrichment of one party, at the expense of the other, the damages
are usually restricted to the value of the services rendered or the cost of the materials
delivered. In short, the liability of the party who has enjoyed unjust benefits is limited to the
value of that benefit only.
The result of contract and quasi contract are similar to that of contracts. So far as the claim
for damages are concerned they are very similar to that of contracts because section 73 of the
Indian Contract Act, 1872 provides remedies for the breach of quasi contracts as provided for
the breach of express contracts in various sections of the Indian Contract Act, 1872.
Remedies are available under quasi contract under Indian contract act, 1872.8
He says that the quasi contracts basically contracts implied by law denote the
nature of evidence established through which the plaintiff can claim but the obligation
arises out by the law. Though the defendant would not intend to assume any
8
ulam Chand v. State of Madhya Pradesh, (1968) A.SC.1218 as cited in Pollock &Mulla on Indian
Contract and Special Relief Acts, P.593
9
T & S Inv. Co. v. Coury, 593 P.2d 503 (Okla. 1979)
10
A Treatise on the Law of Quasi-Contracts. By William A. Keener, Kent Professor of Law and Dean
of the Faculty of Law in Columbia College. New York: Baker, Voorhis and Company. 1893. 8vo, pp.
xxxii, 470. As in cited in E. Allan Farnsworth, Contracts
11
obligation but the law will impose an obligation because to avoid undue advantage to
him at the cost of the plaintiff.
It has been observed that these contracts and quasi contracts are the matter of practical
importance. The concept revolves around the agreement and obligations between parties. The
quasi contracts differ from contracts that are generally express as they contains each terms in
words while in the latter, the terms come into existence by the conduct of the parties. In one
case it appears to be a fiction and in the other appears to be a fact that is legitimately inferred.
In one intention is discarded and in the other intention is ascertained and enforced. In one
duty defines the contract while on the other hand contract defines the duty. Quasi contracts
are not entered by implied words but are operated on the basis of the conduct of the parties. It
seems to be unfair that the law implying a promise on someone whose declarations disprove
any intention but still this practice is in functioning. The express contracts are approved by
parties as a matter of law both sharing equal interests with equal consequences though the
conditions are stated expressly while in the case of quasi contracts the law imposes
obligations taking into view the conduct of the parties in order to prevent undue advantage to
one party at the cost of another. These types of contracts are those which are referred to
distinguish in practice form obligation quasi ex contractu and to pay for benefits conferred. If
the situation arises where a mistake is not to the doer when the benefit is incurred, the
obligation is quasi contractual. The concept of such types of contracts has been in existence
upon the principles of honesty, justice and fairness. Basically the most fundamental principle
to make quasi contract come in existence is upon the principle of justice to ensure no one
ought to have unjustly enrich himself at the expense of another.11
11
Union of India v. Solar Pesticides (P) Ltd, AIR 2000 SC 862
12
So far as there was not an established rule of Quasi Contractual obligation the English
Lawyers were content to enumerate the cases of the Quasi Contract for which they are
provided a remedy as to many species of “Indebitatus Assumpsit (A form of action in which
the plaintiff alleges that the defendant has undertaken a debt and has failed to satisfy it.), but
they evaded the odious task of rationalization. But as soon as the urge was felt to explore
their juristic basis, controversy was born. The quasi contract are covered in chapter V of the
Indian Contract Act, 1872 under the heading of ‘Of certain relations and resembling those
created by contract’. I feel that the Indian contract act, 1872 favors the term ‘quasi contract’
but partially as it is not a real contract because if they would have been in support of this
term, then they would have included this term in Chapter V of the act rather than giving the
heading ‘Certain Relations resembling those created by Contract’ but they mean by this title
that they are referring to quasi contracts12. The term ‘quasi-contract’ is avoided in the chapter
but this chapter is about the doctrine of quasi contracts.13Nothing is precisely clear about the
quasi contracts.
The founder of quasi contract based on the theory of unjust enrichment was Lord
MANSFIELD who explained such obligations based upon the law as well as justice to
prevent undue advantage to one person at the cost of another. The concept was first taken up
in the case Moses v. Macferlan14.
The facts of the case are as such: Jacob issued four promissory notes to Moses and
Moses indorsed them to Macferlan, excluding by a written agreement, his personal liability
on the endorsement. Even so Macferlan sued Moses on the endorsement and he was held
liable despite which he had excluded and, therefore, sued to recover back his money from
Macferlan.
He was allowed to do so. After stating that such money cannot be recovered where the
person to whom it is given can “retain it with a safe conscience”, LORD MANSFIELD
continued:
12
K.K Cooperative Group Housing Society Ltd. v. Goel Associates, 2012 SCC Online Del 1053
13
Hari Ram Seth Khandsari v. Commissioner of Sales Tax, MANU/UP/1273/2003
14
(1760) 2 Burr 1005at p. 1012 as in cited in Pollock and Mulla, Indian Contract Act, 1872
13
A liability of this kind is hard to classify. Since it partly resembles liabilities under the
law of tort and partly it resembles contract since it owed to only a party and not a
person or individual generally. Therefore, it comes within the ambit of an implied
contract or even natural justice and equity for the prevention of unjust enrichment.
The gist of this kind of action is that the defendant, upon the circumstances of the
case, is obliged by the ties of natural justice and equity to refund the money. But apart from
this it should be observed that did not use the word equity to denote the jurisdiction of
chancery but the synonym for “jus naturale”15. Nor, while he based the obligations of quasi
contract upon the duty of restoring benefits unjustly obtained, did he assert that in every such
case an action would lie. As he declared in Weston v. Downes16, ‘I am a great friend to the
action for money had and received, and therefore I am not stretching, lest I should endanger
it’17thus the principle of unjust benefit explained the cases falling within the scope of quasi
contracts: it did not automatically invoke the remedy.
Subject to these qualifications the rationalization of the quasi contract upon the basis
of unjust benefit was accepted for over a hundred years18. But when, in the course of the
nineteenth century, the form of the action was replaced by the dichotomy of tort and contract,
Lord Mansfield’s views were challenged.
Such at least was the conclusion of Lord Sumner. After this decision it becomes
fashionable to discard Lord MANSFIELD’S formulation and to rely upon an implied-in-fact
contract.
15
see Farewell LJ in Baylis v. Bishop of London [1913] 1 ch 127 at 137.
16
(1778) 1 Doug KB 23
17
Id. at 24
18
see Edwardsv. Bales(1884) 7 Man & G 590; Freeman v. Jefferies (1869) LR 4 Exch 189
19
[1914] AC 398 at 452
14
After that it was Lord HALDANE who maintained that common law knows personal
actions of only two classes, namely those who founded on contract and those who founded on
tort. “When it speaks of action arising quasi ex contractu it refers to only a class of
action in theory which is imputed to the defendant by fiction of law.
Lord PARKER expressly pointed out that if a promise to pay back an ultra virus loan
could be imputed to the company as quasi contractual obligation, the result would be to
validate a transaction which has been declared to be void on the ground of public policy and
the law would be enforcing a notional contract where a express contract would have been
void.
This approach dominated the decisions for a long time and the decision was taken to
have settled that the juridical basis for the quasi contract was the implied, notional or the
fictional contract. Where the circumstances of the case do not lead to an inference of this kind
or where such inference would be against the law, no liability will arise.20
The identification of quasi contracts with the implied contracts restricted the scope of
relief which would have been possible without any such hindrance under the principle of
“natural justice and equity”.
A sum of money was paid in advance under a contract for the supply of a machine Or
‘for the supply of machinery’, and the performance was obstructed by the outbreak of
war. Their Lordship allowed the advance to be recovered back as having paid for a
consideration which had wholly failed.
20
SCRUTTON LJ in Holt v. Markham, (1923) 1 KB describe d Lord Mansfield’s doctrine as “now
discarded”
21
(1943) AC 32: (1942) 2 All ER 122, HL.
15
“It is clear that any civilized system of law is bound to provide remedies for the cases
of what has been called unjust enrichment or unjust benefit that is to prevent a man
from retaining the money of or some benefit derived from, another which is against
the conscience that he should keep. Such remedies in English law are generally
different from remedies in contract or tort, and are now recognized to fall within a
third category of the common law which has been called quasi-contract or
restitution”
Support for this approach is also to be found in Lord ATKIN’S speech in United
Australia Ltd v. Barclays Bank Ltd.22
Thus Academic, as well as judicial, opinion has been divided upon themerits of Lord
Mansfield’s Doctrine. But in the leading modern discussion, Goff and Jones have accepted as
its rationale the principle of unjust benefit or unjust enrichment.
22
(1941) AC 1 27-29.
23
AIR 1990 SC 313
16
The name ‘Quasi Contracts’ is given by the English Law to such transactions in which
there is in fact no contract between the parties, but the rights and obligations are created
similar to those created by a ‘contract’.
For a contract there must be offer and acceptance, free consent, lawful consideration
and object and such other elements described under Sec. 10 of the Indian Contract Act. But
Quasi Contracts do no have such essential elements of a contract and, therefore, Indian
Contract Act has now here used the term ‘Quasi or Implied’ Contracts’. Instead it has referred
to “certain relations resembling those created by Contract” under Chapter V of the Act. Such
relations are deal with in the Contract Act under Sections 68-72.
When the essential conditions are not fulfilled an agreement remains unenforceable at
Law, this is a rule. Then why these relations dealt with under Sections 68-72 are recognised
by the Indian Contract Act. The answer to your question is based upon the law of Equity.
Where you have received an advantage or got a benefit from some other party which you
were not entitled to receive it becomes your duty to compensate fully the other party.
Therefore, the Contract Act also, by its Sections 68-72, has given recognition to these
relations. These five sections are based upon equitable considerations that such obligations
should be fairly compensated. A person who has received the benefit is under an obligation to
compensate the person giving the benefit.
The types of relations dealt here in the Contract Act in these sections are stated as below:
5. Person receiving money or goods belonging to another under mistake or under coercion
(S.72).
Illustration
(b) A supplied the wife and children of B lunatic with accessaries suitable to their
conditions in life A is entitled to be reimbursed from B’s property.
The situation discussed by the above section is covered by Section 11 of the Act also, which
deals with agreements with persons incompetent to contract. The two illustrations given
above here also state the same position. However, the situation arises only in dealing with the
incapable persons. Two points here are to be kept in mind.
(1) The amount is recoverable from the property and not from the person. Such person is not
personally liable. If he has got any property, then only the creditors shall be able to get their
re- imbursement. If no property belongs to such person or persons the creditors shall not be
left with any right.
(2) The object supplied must be necessities of life. The word necessities of life is used here
in its technical sense, and has a wide scope. It does not only concern with food, and clothes
but with every thing which the circumstances permit. In England, in one case an engagement
ring for one’s Finance has been treated as a necessity, but vanity bag has not been included,
under this term.25
In India, the term necessities, has also included in its perview the costs of defending a suit on
behalf of a minor, in respect of his property26moneys lent for marriage expenses of a minor
24
S. 68, Indian Contract Act, 1872.
25
Elkington & Co. V. Amery 1936.
26
Watkins V. Dhunoo, (1881) 7 Cal 140
18
and others, say his sisters27 and also a loan to the minor to save his property from execution.28
Thus the term ‘necessities’ is to be viewed in its proper perspective.
The following conditions are to be satisfied for the use of the term ‘necessaries’
(b) These must be ncessary for minor’s requirements, when actually sold or delivered; and
(c) The minor must be having such things in sufficient quantity at the time of such supply.
Non-fulfilment of any of these above stated conditions shall effect adversely the rights of the
other party. Nature of Remedy: Remember, a supplier of necessaries has been granted a
remedy under this section against the property of the person and not the person himself.
A person who is interested in the payment of money another is bound by law to pay and
who, therefore, pay it, is entitled to be reimbursed by the other.29
Illustration:
B hold land in Bengal, on a lease granted by A, the zamindar. The revenue payable by
A to the Government being a arrear, his land is advertised for sale by the Government.
Under the revenue law, the consequence of such sale will be the annulement of B’s
lease to prevent the sale and the consequent annulement of his own lease, pays to the
Government the sum due from A. A is bound to make good to B the amount so paid.
The above illustration is based on the decision given in Faiyazunissa V. Bajrang Bahadur
Singh (1927).
27
Nardan Prasad V. Chandan Lal; AIR 1937 All 610
28
(Kedarnath V. Ajhudhia, (1883)Punj Rec 165
29
S. 69, Indian Contract Act, 1872
19
“When at the desire of the promisor, the promisee or any other person has done.....”, If there
is no desire of the promisor, the act or abstinence of the stranger or even the promiser shall
not amount to consideration and in the absence of lawful consideration, there shall not be any
contract. It is clear from the above illustration, that the payment of the revenue by B to the
Government has not been made with the concurrence of A. Yet, Principles of Equity has
created an obligation upon A to reimburse B, the payment made by him to the Government.
Section 69, lays down three important conditions for its operation:
(a) The person who is interested in the payment of money, should have paid for the
protection of his own interest. If the payment is not bonafide for the protection of his own
interest, but is made without any such notice, then he shall be having no right for
reimbursement.
Let us make our point more clear with the help of the following examples:
(i) A purchases property from B, and the sale is fictitious. A cannot recover from B money
paid by him to save the property from being sold in execution of a decree against B. 30. But
where the sale is bonafide, he shall be entitled to recover the amount from B.
(ii) A’s goods are wrongfully attached in order to releae arrears of Government revenue due
by B, and A pays the amount of save the goods from sale, A is entitled to recover the amount
from B.31
It is sufficient to show that the person claiming the benefit had an interest in paying the
money at the time of the payment. In a case decided by Madras High Court, a similar
decision is given32 when a mortgagee of a tenant’s crop paid the amount due to Government
in respect of a loan given to the tenant (Mortgagor) and raised the attachment. The mortgagee
being interested in payment at the time of payment and therefore, was entitled to recover
from the mortgagor (tenant) the amount so paid to the Government. Remember, this section
does not require from the person interested in payment to have legal propritory interest in the
30
Janki Prasad Singh v. Baldeo Prasad (1908);
31
Tulsa Kunwar V. Jageshwar Prasad (1906).
Abid Hussain V. Ganga Sahai (1928).
32
Sami Pillai V.B. Naidu (1972)
20
property in respect of which the payment has been so made. Decision in Govindram v. State
of Gandal33, Bombay bears in testimony to this point.
(b) The payment should be a voluntary one. If the payment is made voluntarily, the other
party then is not under an obligation to make the payment back. While deciding
in RamTuhul Singh V. Biseswar Lal34 the judicial Committee, observed,” It is not in every
case in which a man has benefitted by the money of another that an obligation to repay that
money arises. The question is not to be determined by nice considerations of what may be
fair or proper according to the highest morality. To support such sa suit there must be an
obligation in the case of a voluntary payment by A of B’s debt.
Example
A canal company owned a canal and was under a statutory duty to keep the bridge on the
canal under repair. The bridge fall into disrepair and the plaintiffs, the highway authority
called upon the canal company to repair it. When the canal company failed to do so, the
plaintiff’s themselves repaired the bridge and broughtan action to recover the money paid.
Held, the plaintiff could not recover as they act as mere volunteers.35.
The payment made by such as the other party was bound by law to pay. The liability for
which payment may be made under this section need not be statutory. Contractual liability is
not a necessary element.
Let us make the point clear with the help of the following Examples:-
(i) W was the owner of a warehouse. G imported certain goods and kept them in the ware
house. The goods were stolen without any negligence on the part of W. The authorities made
a demand on W for the payment of the custom duties which W paid. Held W could recover
the amount from G.36
33
(1950) 52 BOMLR 450
34
(1875) LR 3 I A 131
35
(Macclesfiled Corporation V. Great Central Rly. (1911) 2 KB 528
36
(Brook’s Wharf Ltd. V. Goodman Bros. (1937) 1 KB 534.
21
(ii) The goods belonging to A are wrongfully attached in order to realise areas of
Government revenue due by G. A pays the amount to save the goods from sale. A is entitled
to recover the amount from G.37
Where a person lawfully does anything for another person or delivers anything to him not
intending to do so gratuitiously, and such other person enjoys the benefit thereof, the latter is
bound to make compensation to the former in respect of, or to restore the thing so done or
delivered.
Illustrations:
(i) A, trademen, leaves goods at B’s house by mistake. B treats the goods as his own. He is
bound to pay A for them.
(ii) A saves B’s property from fire. A is not entitled to compensation from B, if the
circumstances show that he intended to act gratutiously. A maneges the estate of his wife and
sisters-in-law and is under the impression that he will receive remuneration for his services.
He is entitled to get reasonable remuneration.
The right of action this section arises only after the fulfilment of the following three
conditions:-
(b) The thing must be done by a person not intending to act gratuitously; and
(c) The person for whom the act is done must enjoy the benefit of it.
The thing must be done lawfully. Here the word ‘lawfully’ is quite significant. It
indicates that after something is done or delivered to one person by another and the thing is
accented and enjoyed by the former, a lawful relationship occurs between the two. Such
decision has been given in Chaturbhuj Vilthaldas V. Moreshwar38. However, it should be
37
(Abid Hussain V. Ganga Sahai; AIR 1928 All 353.
38
1954 AIR 236
22
noted that the thing done or delivered must not have been delivered or done with fraud or
dishonesty.
The thing should not be done or delivered gratuitously. If the benefit to the other person has
been done by a person gratuitously i.e., without any intention to get a reward, he shall not be
able to give any right under this section. The section requires other person to use his right of
rejecting the thing, if he so likes. The section is applicable for those acts only which are done
with the intention of being paid for. Services freely rendered, without any co-operation of a
reward for them do not lie under the preview of this section.
The person for whom the act is done must enjoy the benefit of it. If such person has not
enjoyed such benefit, he shall not be liable to pay for it.
Examples
(i) A village was irrigated by a tank. The Government effected certain repairs to the tank for
its preservation and had no intention to do so gratuitously for the zamindars. The zamindars
enjoyed the benefit thereof. Held, they were liable to contribute. 39
(ii) A Railway Company had constructed a culvert near Madura, which in 1938 it widened at
considerable expense, on a requisiton in that behalf being made by the Provincial
Government. The company had done the work under protest, alleging that the order was
illegal and that they would claim to recover the expenditure, from the government or the
Madura municipality, or both. These two latter, however, had repudiated their liability. In a
subsequent suit on behalf of the Railway Company against the Madura municipality, it was
held by P.C. that Sec. 70 could not be invoked to assist the Railway, for through the work
was done lawfully and without intending to do it gratutiously, the defendants could not made
liable, therefore, as it was not done for the defendants, nor had the defendants enjoyed benefit
of it.40
Section 70 does not apply to persons who are incompetent to contract. In Simohaj Khan V.
Bangi Khan(1931) it has been made clear that Section 70 refers to circumstances in which
39
(DamodarMudaliar V. Secretary of State for India, (1894) 18 Mad 88.
40
(Pallonji Edulji& Sons V. Lonavla Municipality; (1937) 39 BOMLR 835
23
the law implies a Promise to pay, and where there could not have been a legally binding
contract, a promise to pay cannot be implied.
A person who finds goods belonging to another, and takes them into his custody, is subject to
the same responsibility as bailee.
Hollins V. Fowler41, is a good case over the point. The facts of the case are :
H picked up a diamond on the floor of K’s shop and handed it to K to keep it till the owner
appeared. In spite of wide advertisement in the newspapers no one appeared to claim it. After
the lapse of some weeks, A tendered to K the cost of advertisement and an identity bond and
requested him to return the diamond to H.K. refused. K is liable for damages. His entitled to
retain the goods as against every one except the true owner, so if after wide advertisement the
real owner does not turn up and if H is prepared to given indemnity to K, K must deliver the
diamond to H.
The position of finder of Good is s akin to that of a Bailee. Section 71 charges the finder of
goods with certain obligations. But Sec. 168 and 169 strengthen him with certain rights.
Obligations:
The finder of goods must take all reasonable measures to find out the true owner and take all
reasonable care for the protection of the goods. If he does not make reasonable efforts for
finding out the true owner, he shall be liable of wrongful conversion of property.
Rights :
The finder of goods has a right to retain the goods so found till he finds out the true owner,
has got a right to claim for the reward if any from the true owner. He has got a right to claim
for the reasonable expenditures incurred by him. He can also sell out such goods under the
following circumstances.
41
(1875) LR 7 HL 757
24
(b) Where the owner has not been found out even after great diligence.
(c) Where the owner is found out, but he refused to pay the reasonable expenses incurred by
the finder of goods, for finding out the owner, as well as for preserving the goods.
(d) Where the reasonable charges so incurred by him, amount to more than two thirds of the
value of the thing found.
5. Liability of person to whom money has been paid or anything delivered, by mistake
or under correction (Secton 72) :
A person to whom money has been paid, or anything delivered by mistake or under
coercion must repay or return it.
Illustrations.
(a) A and B jointly owe to 100 Rs. to C. A alone pays the amount to C, and B not
knowing this fact, pays 100 Rs. over again to C.C is bound to repay the amount to B.
(b) A railway refused to deliver certain goods to the consignee, except upon the
payment of illegal charge for carriage. The consignee pays the sum charged in order to
obtain the goods. He is entitled to recover so much of the charges as was illegally
excessive.
(c) K paid sales tax on his forward transactions of bullion. Subsequently this tax was
declared ultra vires. Held K. could recover the amount of Sales Tax and that Section 72
is wide enough to cover not only a mistake of fact but also a mistake of law.42
The above examples clearly state the scope of Section 72. The principle involved in this
Section is applicable regardless of the fact whether a privity of contract does or does not exist
between the parties. The principles is based on equity.
The person enjoying the benefit is made liable to compensate the aggrieved party, not on the
basis of any contract between the concerned parties but on the basis of advantage taken by
him due to mistake of or coercion on another. The mistake may relate to facts or even of law
(See Example ‘c’ above).
42
(Sales Tax Officer, Benaras V. Kanakiya of Saraf ; 1959 SCR Supl. (1)1350.
25
The liability to repay money under this Section can be enforced either by the person who has
paid the money or by the person who becomes aggrieved due to non-discharge of such
liability. Many cases have been decided over these issues by the various High Courts of
India.
26
In “The Law of Restitution” Goff and Jones recognize three main classes:
1) where the defendant has acquired a benefit from or by the act of the plantiff;
2) where the defendant has acquired from a third party a benefit for which he must account to
the Plantiff;
3) Where the defendant has acquired a benefit through his wrongful act.
In this discussion a distinction is drawn between genuine quasi contracts and those claims
whose status as quasi-contractual is doubtful.
A) GENUINE QUASI-CONTRACTS
Those cases which are generally accepted as genuine quasi contracts may for the sake of
convenience be considered under six separate heads.
If the plantiff has been compelled to pay money for which the defendant is liable, he may sue
the defendant for the amount so paid. In this the short and simple statement of law two points
must be stressed. To succeed in his claim the plantiff must prove
This category of the Quasi contract in English Law resembles to the category of Quasi
contract as defined in section 69 of Indian Contract law 1872 which talks
about Reimbursement by a person paying money due by another, in payment of which
he is interested: - A person who is interested in the payment of money, which another is
bound by law to pay, and who therefore pays it, is entitled to be reimbursed by the other.
“Where the money is paid to another under the influence of a mistake that is upon the
supposition that the specific fact is true which would entitle the other to the money, but which
27
fact is untrue and the money would not have been paid if it had been known to the payer that
the fact was untrue, an action will lie to recover it back”43
1) It was long back held that in order to entitle the plantiff to recover, the mistake upon which
he has acted must be one of the fact and not of law.
2) The mistake upon which the plantiff relies need not to have arisen in connection with any
supposed contract.
3) The person who has paid the money has no right to recovery if he knew that the payment
was not due. In this case he is not allowed to recover back the money for the reason of
carelessness. But one qualification of this rule must be observed. The money is not
recoverable if the court draws the interference that the plantiff has paid it at his own risk,
irrespective of the true state of the facts. Recklessness or indifference may estop him, where
carelessness will not.
4) A question that has long troubled the courts is whether the mistake must have led the
plantiff to believe that he was legally bound to pay money or whether a purely voluntary
payment is equally recoverable. Bramwell B in 1856 had little doubt of the answer- “In order
to entitle a person to recover back money paid under a mistake of fact, the mistake must be as
to a fact, which, if true would make the person paying liable to pay the money; not where, if
true, it would merely make it desirable that he should pay the money”.44
5) Although prima facie he is entitled to the payment but a plantiff may be estopped from
relying on his mistake where he has represented to the defendant that the money was in fact
due and the defendant has spent which he would not otherwise done.
This kind of Quasi Contract in English Law resembles section 72 of Indian Contract
Act 1872 but with the difference that the Indian Law is not making any distinction
between Mistakes of fact and Mistake of law which English Law do actually
43
Kelly v. solari (1814) 9 M & W 54 at 58
44
Aiken v. Short (1856) 1 H & N 210 at 215
28
The word ‘ineffective’ is not a term of art. It is here chosen as a comprehensive expression,
free from technical associations, to include a variety of cases where the plantiff has paid
money to the defendant in pursuance of a transaction which he believes to be a contract, but
which turns out in fact to nugatory. These kinds of cases can be grouped into three
categories:-
To explain the above set of quasi contract we can have the following example to explain it
up:
Suppose that X pays money to B and instructs B to pay it to A; or that B has in his hands a
fund belonging to X and that X directs B to pay A out of this fund. if B fails to carry out his
instructions, may A sue B? it is clear that no contract exists between A and B, and it is
equally clear that that the mere fact that B may be under a contractual liability to X and the X
wishes to benefit A will not enable A to sue B for that A will met at least at common law, by
the doctrine of privity. it has nevertheless been held in a number of cases that once B has
notified A that he is ready and willing to pay the money, A may sue B in quasi contract
if B fails to do so.
A plantiff, who has suffered a loss through a wrongful act committed against him by the
defendant, may in certain circumstances be entitled to sue the defendant in quasi contract for
the money had and received to his use. He may for instance have been compelled by the
improper pressure of the defendant to pay money which could not lawfully have been
demanded from him.
This kind of quasi contract in English Law resembles to the coercion part of Section 72
of Indian Contract Act 1872.
Quantum Meruit
29
It is a phrase which means, “payment in proportion to the amount of work done”. Quantum
meruit literally means, “as much as earned” or as much as merited. “Under English Law a
party who for some reason can not claim under the contract, may under certain circumstances
claim way of Quantum merit i.e., reasonable remuneration for work done. Thus Quantum is a
remedy and not any alternate to the form of damages. When the party injured by the breach,
has at the time of breach done part, but not all of that which he is bound to do under a
contract, and is seeking to be compensated for the value of the work done, he can get a
remedy under this concept, for example when the contract provides that payment is to be
made on completion of the work, the party can not demand any remuneration under the
contract as the work has not been completed. But he can claim on the basis of quantum
meruit for the work done by him.
Lord Atkin has explained this concept in very simple words with the help of an example in
the case of Steven V. Bromby& Son45. To quote him, “If I order from a wine merchant 12
bottles of whisky at so much a bottle, and he sends me ten bottles of whisky and two of
brandy, and I accept them, I must pay a reasonable price for the brandy”.
The defendant proposed to erect and let seats to view the funeral of the Duke of Wellington.
It agreed that the plaintiff should advertise the seats outside England and sell tickets, and that
he should receive a commission on all the tickets thus sold. The plaintiff prepared
advertisements and paid printers, but, before he had sold any tickets, the defendant
wrongfully revoked his authority.
It was held in De Bernardy V. Harding46 be Alderson B. that the plaintiff could could one
in quantum meruit for the work already done.
Alderson B. said “Where one party has absolutely refused to perform or has rendered himself
incapable of performing, his part of the contract, he puts it in the power of the other party
either to sue for a breach of it or to rescind the contract and sue on a quantum meruit for the
work actually done.”
45
(1919) 2 KB 722
46
(1853) 8 Exch. 8zz
30
The objective of Quantum meruit is differ it from that of awarding damages. Damages are
awarded to put the party in the same position as if the contract as if the contract was
performed by the other side and to compensate the injured party for the injury suffered by the
breach. On the other hand, remedy under quantum meruit is to compensate a party for the
work he had done and to place him in the same positioin as if there was no contract between
the parties.
The right of claiming Quantum Meruit, like damaged does not arise out of contract. It is a
right conferred by law. It is a Quasi-Contractual right and not a contractual right.
(1) Work done under void contracts (Sec. 65): Where a person redners services under an
agreement which later on is being discovered as void or has rendered services on pursuance
of a transaction, supposed by him to be a contract, but the contract in truth, is without legal
validity, he gets a right to be compensated for the advantage received by the other party from
him.
Craven Ellis V. Canons Ltd.47 serves a good example for elucidating this point.
The plaintiff was appointed managing director of a company by an agreement under the
company’s seal which provided for his remuneration, By the articles of association each
director was required to obtain certain qualification shares within two months of his
appointment. Neither the plaintiff nor the other directors ever obtained these shares. The
plaintiff nevertheless, purporting to act under the agreement rendered services for the
company and sued for the sums specified in the agreement, or, alternatively, for a reasonable
remuneration on a quantum meruit.
(2) Work done with on non-gratutious basis (Sec. 70) : When a person does some work or
renders some serivce, with an intention not to do so gratutiously and the other person takes
the benefit of such work or service, the person rendering such service or doing such work can
47
(1936) 2 KB 403.
31
claim compensation from the person enjoying such benefits, or get the goods so delivered
back from him.
Example
A, a trader, leaves some goods at B’s house by mistake. B. Treating the goods as his own
uses them. He is bound to pay A for them.
The plaintiff had agreed to writer for “The Juvenile Library”, a series published by the
defendants, a book on Costume and Ancient Armour. He was to receive £100 on the
completion of the book. He collected material and wrote part of the book, and then the
defendants abandoned the series. There were negotiations for the publication of the books as
a separate work, but these fell through, apparently as the plaintiffed that he had written
especially for children and that to publish his work as a magnum opus would injure his
reputation. He claimed alternatively on the original contract and on a quantum meruit.
(4) Divisible Contract: Where a contract is divisible and the party not in default has
recieved the advantage out of it, the defaulting party can get compensation under quantum
Meruit. But remember, the party in default can not get this right in case of indivisible contract
on the basis of this principle.
S undertook to build a house for H for Rs. 50,000. After completing half of the work, S
abandoned the construction work. He afterwards got the house constructed by some one else.
It was decided, S could not recover the remuneration for the construction work done by him
since the payment was to be made only after the completion of the building.
48
(1831) 5 C&P 58
49
(1898) 1 QB 673 CA
32
(5) Badly performed indivisible contracts: Where an indivisible contract has been
performed the work is badly done, the performance can get the remuneration, but the other
party also gets a right to make deduction for the bad work.
The case of Hoemig V. Isaacs50 serves a good examples to illustrate the point.
A, a decorator undertook to decorate B’s flat for a lumpsum of Rs. 10,000. B. laid down
certain requirements. A completed the work but B pointed out certain defects in the work
done A. B got those defects removed from C at a cost of Rs. 500/- Held A could recover
(10,000-500=)9,500/- from B.
In a number of cases where the law affords a remedy, it is difficult to determine whether this
is founded upon a genuine, if tacit, consent and is contractual, or whether it is independent of
the consent and is quasi-contractual. The following are the most important of these cases.
Accounts Stated:-
The Plantiff who sues upon an account stated proceeds upon the assumption that the
defendant has admitted a debt to be due to him. This remedy can be applicable in two
separate sets of circumstances. On one hand where the plantiff and the defendant are having a
set off account. On other hand where plantiff and the defendant are having some mutual
agreement of showing that plantiff is suppose to receive something from the defendant due to
him.
Judgment Debts:-
The liability to pay a sum adjudged to be due by a court of competent jurisdiction, whether it
be an English, or, in certain cases, a foreign tribunal, has sometimes been classified under the
head of Quasi-Contract51
50
(1952) 2 All ER 176 CA
51
Halsbury Law of England (4th edn.) 699.
33
The language of the tradition has sometimes encouraged the inclusion within the category of
the Quasi-Contract of claims for money due under statute or bye-law, or by force of custom.
Under English law the claim by the plantiff against the necessary goods supplied to a person
under incapacity comes under the category of doubtful quasi-contracts. But in Indian Law
section 68 of Indian Contract law deals with the claim of Necessities, which make it a
efficient and well developed branch of Quasi contract.
34
CONCLUSION
It is proved by the research that contracts and quasi contracts are far different. They are not
contracts but are obligations that the law imposes upon someone to prevent undue advantage
to one person at the cost of another. The Indian Contract Act, 1872 covers these types of
obligations under the Chapter V under the title ‘OF CERTAIN RELATIONS RESEMBLING
THOSE CREATED BY CONTRACT’ but the act does not include the term ‘quasi contract’.
It could be because of the reasons that the act also wants to tell that these type of obligations
are far different from real contracts and they must not be called quasi contracts. It is the law
that compels parties who get unduly advantaged to compensate the other party on the
principle of equitable justice. The foundation of quasi contracts is based on the principles of
Equity, Justice and Good Conscience, which requires that nobody shall benefit
himself unjustly, at the cost of others. This is known as the Principle of Unjust Enrichment.
The basis of quasi contract is that technicality of contract cannot override the requirements of
justice. When something has been done for the benefit of another person without the waiting
for his formal assent as also for the completion of other formalities, it is expected that the
person receiving the benefit must compensate the other party for the trouble and expenses
incurred. The contract and quasi contract can be distinguished by focusing on the concept of
agreements and obligations by and on the parties respectively. The unjust principle came
from the old maxim of Roman law ‘Nemo debetlocupletari ex alienajactura’ that means no
man must grow rich because of one’s personal loss.52 The doctrine of quasi contracts has
been an essential part and aspect of the Indian Contract Act, 1872 in dealing with such
obligations which causes loss to one party over undue benefit to the other party.
52
13th Report, Law Commission of India, P.13
35
REFERENCES
Acts/Statutes
Books
Cases Referred
K.K Cooperative Group Housing Society Ltd. v. Goel Associates, 2012 SCC Online
Del 1053
36
Edwardsv. Bales(1884) 7 Man & G 590; Freeman v. Jefferies (1869) LR 4 Exch 189
Sales Tax Officer, Benaras V. Kanakiya of Saraf ; 1959 SCR Supl. (1)1350.
Websites
1. www.indiakanoon.org
2. http://www.legalservicesindia.com/articles/tradeci.htm
37
3. http://shodhganga.inflibnet.ac.in/bitstream/10603/7957/9/09_chapter203.pdf
4. http://shodhganga.inflibnet.ac.in/bitstream/10603/7957/9/09_chapter%203.pdf