What are Quasi Contracts under Indian Contract Act?
A quasi contract is a fictional contract recognized by a court. The notion of a quasi-contract can be traced to Roman law and is still a concept used in some modern legal systems.
The contract aims to prevent one party from unfairly benefiting from the situation at the other party’s expense. These arrangements may be imposed when goods or services are accepted, though not requested, by a party. The acceptance then creates an expectation of payment.
A quasi contract is also known as an implied contract. It would be handed down ordering the defendant to pay restitution to the plaintiff. The restitution, known in Latin as quantum meruit, or amount earned, is calculated according to the amount or extent to which the defendant was unjustly enriched
Quasi contracts are such contracts where legal obligations are imposed by law without offer and acceptance. The quasi contractual obligations are based 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 and the retention of such enrichment must also be unjust.
In an action for unjust enrichment the following essentials have to be proved:
○The defendant has been ‘enriched’ by the receipt of a ‘benefit’
○The enrichment should be at the expense of the plaintiff
○The retention of the enrichment should be unjust
The Contract Act describes these obligations as ‘certain relations resembling those created by law’.
The Principle of Unjust Enrichment
Quasi-contracts are based on the principle of “Nemo debet locupletari ex aliena jactura”, which means ‘No man should grow rich out of another person’s loss’. Therefore, liability in the case of quasi-contractual obligations is based on the principle of ‘unjust enrichment’. It essentially means that no man should get unjustly enriched at the cost of another person’s loss. That means no person should gain anything unjustly, when his gaining such a thing may mean a loss for another person.
Features of a Quasi-Contract
Their origin does not lie in the offer and its acceptance, that is, in an agreement between the parties.
They are rather based on justice, equity, and a good conscience and on the principles of natural justice
Elements Of Quasi Contracts
- There are three inherent principles to a quasi contract.
- The plaintiff must show evidence of the goods or services they should have been compensated for.
- The defendant must have accepted those goods or services and receive some type of benefit from them.
- Finally, the defendant must have accepted said goods or services under unfair circumstances where the plaintiff didn’t receive any compensation.
- A standard, legal contractwould typically set out stipulations agreed upon by both parties before the services were rendered, or the goods received. A quasi contract, however, comes into play when one party never had any intention of entering into a legal contract. This is when the court steps in to create a contract and achieve a level of fairness between the parties involved.
A contract has certain elements, like the offer, and its acceptance, that give rise to an agreement. The agreement, if it is legally enforceable becomes a contract, that is, it can be taken care of in a court of law in case it is not performed by either of the parties involved. Yet, there are certain situations where even in the absence of an ‘agreement’ as such, one or the other party is obliged to perform something. Such obligations are called quasi-contractual obligations. Chapter V of the Indian Contract Act, 1872 deals with such obligations.