Submitted to

Sir Anis Iqbal

Submitted by
S M IBRAHIM HASSAN

ROLL NO 85

LLB 4th SEMESTER

KHYBER LAW COLLEGE

UNIVERSITY OF PESHAWAR
A contract is formed by an agreement, which is enforceable by lw. however,
in some cases, a contract is formed without any agreement. When there is no
offer and acceptance and the parties have no intention to enter into a contract
but still a contract is formed, such a contract s called Quasi Contract.

Definition:
Section 68 to 72 of the contract act deals with Quasi contracts. Quasi
contracts arise by law. The law binds the parties in these contracts. The law
imposes obligation on one party and confers a right in favor of another. The
term Quasi Contract is used because it resembles a contract but is different
in mode of creation. The law creates these contracts.

Difference:

Basis of difference Contract quasi contract

Formation It is formed by parties It is formed by law
Elements of contract All the essential elements of the essential
contract mention in sction elements of
10 of contract act are contract mention
present in sction 10 of
contract act are
absent
Obligaion the obligation of parties is The parties create
Imposed by law obligation for
themselves by
their own.

Similarity:
There is one similarity between a contract and a Quasi contract and that is as
of the consequences of breach of contract. In case of breach of Quasi
contract, the remedies available for the breach are the same as those
available for contracts under section 73 of the contract act.
Principle of Quasi contract.
Quasi contract is based upon the principle of Unjust enrichment that was
given by Lord Mansfield . According to this principle, a person shall not
enrich himself unjustly at the expense of another person.

Example: Hina with her mother went to a garments shop where she bought
a dress worth Rs5000, at that they time they had only Rs2000 in their purse.
They paid the shopkeeper Rs 2000 and promised to return the remaining
3000 in the evening. The shopkeeper agreed. In evening Heena went to the
shop and paid him the sum of Rs 3000. the next day her mother also went to
the shop unaware of the fact that her daughter has paid the money, she also
paid him 3000 rupees. The shopkeeper took that too. The mother paid that
sum in ignorance and the shopkeeper enriched himself unjustly with that
extra sum of 3000. he is liable to pay the sum of 3000 back to Heena's
mother.

Types of Quasi Contracts.

The various types of Quasi contracts are as follows:

1. Supply of necessities:
According to section 68 of the contract act, if a person who is incapable
to enter into a contract(minor or lunatic) or someone whom he is legally
bound to support is supported by another person in providing necessaries
that are suited in his conditions of life, is entitled to be reimbursed from
the property of such incapable person.

Here the following points must be noted that

 the personn who is being supplied with necessaries is incapable of

entering into a contract. It means he is either minor or lunatic.
  the person who is supplying has supplied him or someone whom
he is legally bound to support with necessities of life.

 he must not be provided with luxuries but only necessities of life.

 the supplier is entitled to only a reasonable amount from the

supplied person's property,not the actual amount.

 the supplied person is not liable, the price of goods supplied can be
recovered from his property only

 it is mandatory that the supplied person did not have such

necessaries before and he was in need of those supplied to him.

Example: Usman is a lunatic, he has three children, all of them are supported
by Ali in their basic needs of life such as food and school for one year, in
this case Usman is liable to reimburse this amount to Ali and Ali can recover
a reasonable amount from Usman's property.

2. Payment by interested person:

According to section 69 A person who is interested in payment of money
whom another person is bound by law to pay and therefore pays it, such
person is entitled to be reimbursed that money in later times.

Such person makes the payment to secure his own interest and later on
receives his money back also. Following points must be noted:

 The person is interested in payment to protect his own benefit and

interest

 He himself is not bound to pay

 Another person is bound to pay

 Payment is made to another person

Example: i have a house in which Hassan is living on rent. There is some

sort of leakage in the water tank, he repairs it and it costs him rs 2000. he did
this repair for his own interest but as i am the owner of the house and i am
legally bound to pay the sum, i have to pay him the sum of rs 2000 which he
has paid

3. compensation for non gratuitous act:

according to section 70 0f the contract act, where a person lawfully does
anything for another or delivers him anything, not intending to do so
gratuitously, and the other person enjoys benefit of his act or thing
delivered. The person who has taken benefit is bound to compensate in
respect of or to restore the act done or thing delivered. Gratuitous means
with an intention of taking no return of the act done, but here the act done
is ungratuitously .But

 the act done mustbe lawful

 it is done by person who is not interested to act gratuitously.

 The other person enjoys benefit of act done or thing delivered.

Example: Shah is a an electrician and he repaired the street lights

ungratuitously and obviously the people received the benefit of his act, he is
entitled to get compensation from the concerned authority

Ali delivered food to Khan with a gratuitous intention i.e without an

intention of getting reward. Khan is not bound to compenste Ali for the
delivery.

4. Finder of goods.
According to section 71 of the contract act, when a person finds goods
belonging to another person and takes them into his own custody, he is
subject to same responsibility as a "bailee". He is bound to take as much
care of the goods as a man of ordinary prudence would. Following are
the duties of such person

 He must take necessary measures to find owner of goods

  He must take care of the goods and

 He must not use them for his own purpose.

 He must return to the true owner .

In such circumstances, the finder has some rights also. Such as,

 He can retain goods against any person except the true owner.

 He can ask the owner for all expenses which incurred in taking
care of the goods or finding the owner

 He can retain goods until owner pays expenses

 He can sue owner for award of compensation which the owner

promised.

 He can retain the goods unless rewarded

 He can sue anyone who deprives him from the possession of

goods

However there are some situations where a finder can sell the goods
.Following are the conditions.

 If the goods are perishable, he can either use it or sell it. For
example Mr.Khan went to a flower shop and left his bag of fruits
there. the flower vendor had no refrigerator to put the fruits.he can
sell those fruits.

 If Expenses of finder values 2/3rd of actual value, he can either sell

the goods or use them for his own purpose. For example the fruits
that Mr.Khan left at the flowers shop were of 150 rupees and the
flower vendor spent more than 100 on finding Mr.Khan in this
situation the flower vendor can sell them .

 When owner could not be found by reasonable diligence. For

example, the flower vendor tried his best to find Mr.Khan but
 could not find him. in this situation the flower vendor can sell the
fruits.

 When the finder of goods spends money on its possession or for its
safe custody and the owner refuses to reimburse the money spent
on the good by the finder , then the finder has the right to sell it.

For example. The fruits which Mr.Khan left at the flowers vendor, the
vendor did not have a refrigerator. He bought ice to keep the fruits
from drying. The next morning Mr.Khan came and asked for his
fruits. Vendor asked him for the compensation of amount he spent
while taking care of fruits. Khan refused to pay, vendor has the right
to retain goods and sell them.

5. Money paid or thing delivered under mistake or

coercion.
According to section 72 of the Contract act, when money is paid to a
person or something is delivered under under mistake or coercion .such
person must repay it to the person who made it.

Example: i transferred money to someone mistakenly through easypaisa

app, he is legally bound to pay back that sum.

i went to a shop to buy a chocolate. i gave the shopkeeper a note of 5000

considering it to be 20 rupees. i did this under a mistake and he is bound to
pay back.
What is a breach of contract
A breach of contract occcurs when one of the parties to a contract refuses to
perform his obligation under the contract. A breach of contract may be either
partial or whole, but the effect is that one of the party fails to perform his
part of the obligation. When the breach of contract occurs, then the
aggrieved party is discharged from his part of obligations of the contract.
The aggrieved party also has the right to take action against the party not
performing his commitment under the contract. There are two parties when a
breach of contract takes place

1. aggrieved party: the party which suffered loss

2. defaulting party: the party which caused the loss

Breach of contract is of two types

1. Anticipatory breach

2. Actual breach

 Anticipatory Breach: Anticipatory breach occurs in executory

contracts. If before the performance of contract becomes due, one of
the parties decides not to perform the contract,it is an anticipatory
breach of contract. The person makes his intention known to the other
party that he does not intend to complete the contract and the terms
binding him to the contract will no longer be his liability. The
anticipatory breach is made in the following way:

1. By express repudiation: one of the parties renounces his

obligations towards the contract before his actual performance is due.

2. By implied repudiation: one of the party before his performance

is due make some impossibility before the time of performance by
some act which makes the performance of the contract impossible.

Section 39 of the contract act states that in the doctrine of anticipatory

breach , if a party to a contrct refuses or makes it impossible to perform his
part of the obligation completely, the other party can put an end to the
contract, except when by words or conduct the first party shows his intention
to continue the contract.

Example: Usman promised Ali that he will supply him 10 mobile phones at
the cost of 1 lac rupees on 1st august. Usman informs Ali on 15th july that he
is not interested to supply him phones as he has found a client who is giving
him better rate. In this case usman committed anticipatory breach y express
repudiation.

A tailor promised Sara that she will make dresses for Sara's wedding which
is due on 1st august but before 1st august the tailor made the clothes but sold
all those dresses to someone else. In this case the tailor committed
anticipatory breach by implied repudiation.

Rights of the Aggrieved party:

In case of anticipatory breach of contract, the aggrieved party has the
following rights:

1. the aggrieved party can rescind the contract and claim for damages for
problems caused by the non fulfillment of contract. He may not wait
for the due date.

2. the aggrieved party can wait till the performance date and treat the
contract as operative till the date of performance and wait for the other
party to perform his part of obligation and if the party does not
perform on due date he has the right to sue for actual breach of
contract. However if before the actual performance, some event
happens which makes the performance impossible without the fault of
any party, such contract becomes void due to supervising
impossibility and the party will be excused from his role in agreement.
The promisee will not be able to take any action after that date.

Amount of damages:
Damages mean monetary compensation. The damages available to the
aggrieved party are
 1. if the aggrieved party rescinds the contract when the breach of
contract occurs, the damages is the difference between the price on
that date and the price of contract

2. if the aggrieved party waits till the date of performance , the the
damages will be the difference between the price on the due date and
the price of contract

Actual Breach of contract:

Actual breach of contract occurs when one of the parties do not (a) on the
due date of performance or (b) while the performance take place.

1. on the due date of performance:

if one of the parties fails to performor refuses to perform his part of

obligation on due date , it is called actual breach of contract.

For example. Abid promised to supply goods to Syed on 1 june but fails
to deliver on due date. He committed actual breach of contract

2. while the performance takes place:

when one of the parties performs a part of the contract but fails or refuses
to perform the remaining part of the contract it is called actual breach of
contract while performance takes place.

Example. Abid promised to supply 50 computers to Ali and promised to

deliver 40 computers on 1st june and 10 on 3rd june. Abid delivers 40
computers on 1st june but refuses to deliver remaining 10 computers. In
this case Abid committed actual breac of contract while the performance
of contract.
Consequences of Actual Breach of Contract:
Section 55 of the contract act states that when there is a fixed time for the
performance of contract and a breach of contract takes place, the contract is
voidable at the option of promisee. Further the promisee is also entitled to
claim compensation for the losses in case of non performance of theof the
agreement at specified time.

If a fixed time is not specified for the performance of contract, it is not

voidable at the option of promisee . however the promisee is entitled to
compensation of the losses suffered by him.

Remedies for breach of contract:

When a breach of contract occurs, the aggrieved party has some options
available to him. The following remedies are available to the aggrieved
party.

1. recission of the contract

2. suit for damages

3. suit for specific performance

4. suit for injunction

5. suit upon quantum meruit

1. recission of the contract:

Recission means cancellation. When a party to contract fails to or
refuses to perform his part of obligations, the other party isrelesed from
their obligations under the contract and has the option to rescind the
contract. The aggrieved party also has the option to sue the defaulting
party under section 75 of contract act and claim damages. If this option is
choosen, the aggrieved party has to file a suit in the court for recission of
the contract . if the court grants the permission of recission, the contract
is cancelled ,the aggrieved party may no longer fulfill their obligations
and the aggrieved party has now the option to claim damages for the
losses they suffered due to the breach of contract.

Example: farman promises to deliver syed 200 pairs of shoes at the price
of 1000 each on 2 june. Syed promises to pay as soon as he receives the
shoes. Farman fails to deliver shoes on due date. Syed is released from
his obligations and syed can file a suit for recission and ask for damages.

Note: according to section 64 if the aggrieved party treats the contract as

rescinded, he has to return any benefits if he has received.

2. suit for damages:

the aggrieved party may sue for damages in case of breach of contract.
Damages are the monetary compensation allowed to aggrieved party in
respect of loss suffered by it. The damages depend on the amount of loss
incurred due to breach of contract. The parties who have made an
agreement can settle the amount of damages themselves when such a
breach occurs. Sometimes conflicts arise and price settlement is difficult
between the two parties. In this case the court makes an assessment of the
losses and damages have to be paid to the aggrieved party based on this
assessment. Section 73 lays down the different types of damages that an
aggrieved party can claim. These are the following:

 General or ordinary damages

 Special damages

 Exemplary damages

 Nominal damages

 Liquidated damages
1. General or Ordinary Damages
General or ordinary damages arise out of breach in the usual course of
the non performance of the contract. The aggrieve party has the right to
claim damages for the natural or direct losses due to breach of the
contract. General losses do not have any provision for damages in case of
indirect and remote losses.

Example:

A promised B to deliver some products. But did not tell him that the
breach of contract will cause him special damage. A committed Breach
of contract . B sued him and B was awarded general damages and not
liable for loss of profits.

2. Special Damages
Compensation for special losses is called special damages. Compensation
is recovered only in special circumstances and if it is brought to the
notice of the defaulting party. When a party claims special damages it has
to prove that the other party to the contract, knew, at the time of making
the contract, that there would be a loss in special circumstances, in case
of breach of contract. If special damages are proved as a result of breach
of contract and it is communicated to the other parties then special
damages will be awarded.

Example:

A invited a singer to sing at his son's wedding party and gave him
advance of 10.000 and told him that if he fails to perform his romise A
will suffer special loss. The singer commited breach of contract and was
held liable to special damages

3. Exemplary Damages
Exemplary damages are also called vindictive damages. They are
awarded by the court if a party has suffered mentally or emotionally due
to breach of the contract. The court makes an exception to the general
principle that damages should be awarded only for financial loss due to
the breach of contract. The law finds it difficult to compensate for mental
pressure or suffering or humiliation of the aggrieved party due to the
breach of the contract. It usually compensates for financial losses. In
exceptional cases it awards exemplary damages.

There are two important matters in which the court awards exemplary
damages. These are the following:

Breach of promise to marry another person:

If there is a breach of contract to marry another person although a
promise has been made, the aggrieved party can claim damages from the
person who has broken the promise.

Unjustified refusal of a banker to honour a cheque of

another person:
Sometimes a bank refuses to honour a cheque even though the account
holder has sufficient funds in his/her account. This causes loss of
reputation to the account holder. The aggrieved party can claim damages
from the bank. The smaller the amount that is dishonoured the greater
would be the damages.

Example :

A person applied for travel loan. Bank promised to credit his account.
Later when he tried to withdraw money from bank account, he found that
the bank had not credited his account. In this case exemplary damages
were allowed to him

4. Nominal Damages
Nominal damages are awarded when in a breach of contract the
aggrieved party does not have any losses due to the breach. The courts
however treat this seriously so that such types of breach are not made by
the parties. Therefore, they award a small token as compensation to take
 note of the offence made by the guilty party. A small compensation may
be charged so that the guilty party recognizes its mistake.

Example: shahkar promises umer to sell jaggery t rate of 200 per bag.
Shahkar does not supply umer jaggery. At the time of breach, the market
rates were the same. Umer is entitled to nominal damages only

Jasee promised mujo to buy his car. But later rfused. Mujo sold it to
musawir and suffered no loss. Mujo then sued jasee for loss of profit. Held
that mujo is entitled to nominal damages only.

Liquidated damages:
When the sum of money is mentioned in the contract that if a party breaches
thecontract, they will be liable to pay that specificsum of money and not
more .

Example:

A promised B to deliver 20 cars for servicing purpose. If he fails he shall

pay 20.000 as damages. In case of breach of contract, he had to pay 20,000
as damages.

Suit for Specific Performance

The court can use its discretion when it is essential to order the party that has
made a breach of a contract to perform what was intended to be done in the
contract between the parties. The Law usually does not insist upon
performance of the contract that a party has refused to complete even though
the aggrieved party demands justice. The reason for this is that the court
considers compensation as damages to be the right measure for the
aggrieved party. However, in some specific cases, courts may order the
guilty party to complete the contract entered into between the parties.

When court orders specific performance:

In the following cases the court can grant relief and direct the guilty party in
terms of specific performance of the contract:
  Where there is no standard for quantifying the actual damages that are
caused to the aggrieved party by non-performance of the contract.

 Where the monetary compensation is not an adequate measure of the

loss of the aggrieved party. In cases of contracts entered into for sale
of immovable property or special rare antique pieces or certain items
which mean a lot to the aggrieved party and which cannot be replaced.

 Where a property of the aggrieved party is held by his agent or trustee

and the act is to be done to perform a trust function.

Where courts will not allow specific performance:

The courts will not allow relief for specific performance in the following
cases.

 When the court considers monetary compensation to be adequate for

breach of contract.

 When contracts are made by trustees or agents who have violated their
powers and breach of contract occurs.

 In contracts of a personal nature, especially in the case of a contract to

marry or a contract to stage a show

 In cases where the courts cannot supervise the performance of the

contract because it involves continuous duty to complete the contract.

 In cases when the court is of the opinion that enforcement of specific

performance is not possible due to the intricacies of the terms of the
contract.

Example: A agrees to buy and B agrees to sell a picture by a dead painter and two rare
China vases. A may compel B specifically to perform the contract for there is no
standard ascertaining the actual damages which would be caused by its non-
performance

A, a singer, contract with B, the manager of a theatre, it sing at his theatre for one year,
and to abstain from singing at other theatre during this period. She absents herself. B
cannot compel A to sing at his theatre, but he may sue her for an injunction restraining
her from singing at other theatres.

Suit for Injunction

Injunction is an order of the court where a person is prohibited to do a
specific act or action. Sometimes a party to the contract does some action
which he has promised that he would not do; the court has the right to issue
an order to prohibit him from doing it. This action is taken by the court when
a party is guilty of breach of some negative term in the contract. Injunction
is therefore a negative order of the court that stops a party from some action.
It is in other words a preventive relief to a party at the discretion of the court.
To give an injunction there are certain requirements of the court. These are
the following:

 The contract between the parties should consist of two parts. One
agreement should be affirmative and the other should be negative in
nature.

 The negative part of the agreement should be separate from the

positive aspect.

 The person applying for injunction should not have failed in

completing the contract.

Examples: Ali contracted with Saleem that he will not build a house on his
land, but he started construction. Court granted injuction against Ali and
made him to stop the work.

A singer promised to sing at Mujahid's place and nowhere else, but started
singing at Jasaleeq's place too. Mujahid sued her and court stopped her from
singing at other places.

Suit upon quantum meruit

The term quantum meruit means payment in proportion to the work done or
reasonable value of work done. When a person has done some work under a
contract and the other party cancels the contract or an event happens which
is makes the performance of contract impossible, such party can claim
remuneration for work done already. The right to claim for quantum meruit
arises when the original contract isdischarged. The aggrieved party may sue
for quantum meruit in the following cases

 When an agreement becomes subsequently void

 When there is a promise to give services but no agreement about

reward

 When something is done ungratuitously

 When contract is divisible

 When the completion of contract is preveted by other party

 When a divisible work is performed badly

Example: ibrahim hired Shabir for construction of a seven storey house,

when four storey were built, ibrahim stopped shbir from work. Shabir can
get compensation for work done

Craven Ellis was employed as managing director in a company. After three

months it was found that the directors were not authorized to appoint him.
Craven sued for remuneration. Held craven could recover for work done
(craven ellis vs canon ltd)