Mercantile Law – Study Notes Chapter 10 Quasi Contracts

CHAPTER TEN
QUASI CONTRACTS
ICAP'S STUDY TEXT
LO #* LEARNING OBJCTIVE
REFERENCE**

LO 1 DEFINITION AND TYPES OF QUASI CONTRACT 10.1.1, 10.1.2

LO 2 QUANTUM MERUIT 10.1.3

** Explanation of Reference:
First digit in reference represents chapter number, second and third digits represents section and sub-section number of
ICAP’s Study Text (2016 edition).

1 By: M. Asif, ACA

Mercantile Law – Study Notes Chapter 10 Quasi Contracts

LO 1: DEFINITION AND TYPES OF QUASI CONTRACT:

Meaning of Quasi/Constructive Contract:
A quasi contract is a relation between individuals having rights and liabilities (resembling to
contractual rights and liabilities but) created by law. It is an obligation based on principle of equity
and justice which means no person should get benefit at expense of another.

Types of Quasi Contracts:

Right to Recover the Price of Necessaries Supplied:
The person who has supplied the necessaries to a person who is incompetent to contract or anyone
who is dependent on such incompetent person, is entitled to claim their price from the property of
such incapable person.

Right to Recover Money Paid for Another Person by Interested Person:

A person who is interested in the payment of money for which another person is legally bound to
pay, and who therefore pays it, is entitled to recover the payment made from the person who was
legally bound to pay.

Right to Recover Price for Non-Gratuitous Act:

Such right to recover arises if the following three conditions are satisfied:
(i) The thing must have been done or delivered lawfully;
(ii) The person who has done or delivered the thing, must not have intended to do so
gratuitously; and
(iii) The person for whom the act is done/to whom thing is delivered must have enjoyed the
benefit of the act done/thing delivered.

Responsibility of Finder of Goods:

A person who finds goods belonging to another, and takes them into his custody, is subject to the
same responsibility as a bailee. He must take care of goods and should take reasonable steps to
trace its true owner.

Right to Recover Payment made by Mistake or Under Coercion:

A person to whom money has been paid, or anything delivered by mistake or under coercion, must
repay or return it.

2 By: M. Asif, ACA

Mercantile Law – Study Notes Chapter 10 Quasi Contracts

LO 2: QUANTUM MERUIT:
Meaning:
The term 'quantum meruit' means 'as much as earned'. In other words, it means payment in
proportion to the amount of work done.

Cases in which the Claim of Quantum Meruit Arise:

Generally, one cannot claim performance from another unless one has performed his obligation in
full but in certain cases, a person can claim remuneration of work done if he has performed part of
his obligations and contract is discharged.

In Case of Void Agreement, or Contract that becomes Void:

When an agreement is discovered to be void, or when a contract becomes void, any person who has
received any advantage under such agreement or contract is bound to restore it, or to make
compensation for it, to the person from whom he received it.

In Case of Non-gratuitous Act:

(already explained in previous learning objective.)

In Case of Act Preventing the Completion of Contract:

If a party does not complete the contract or prevents the other party to complete the contract, the
aggrieved party can sue on quantum meruit.

In Case of Divisible Contract:

The party at default may sue on a quantum meruit if the following conditions are satisfied:
(i) If the contract is divisible; and
(ii) If the party not at default has enjoyed benefits of the part performance.

In Case of Indivisible Contract Performed Completely but Badly

The party at default may claim the lumpsum less deduction for bad work which the other party has
paid to remove faults.

3 By: M. Asif, ACA