Quasi contract- A contract in which obligation of one party to another imposed by law

independently of an agreement between the parties. Quasi-contract refers to situations in which a

defendant is bound as if there were a contract. Suppose a person forgets his phone is A’s home
then A is bound to return the same. Here A is bound to return the same not because of any
contractual obligation or some tort liability but because of quasi contractual obligation.

RATIONALE

The theory on which these obligations are based is not yet settled.

THEORY OF UNJUST ENRICHMENT

Lord Mansfield is considered as the real founder of this obligation said that law as well as
justice must try to prevent “unjust enrichment” of one person at the cost of another.

MOSES v. MACFERLAN (1760)

Facts: Jacob issued four promissory notes to Moses and Moses endorsed them to Macferlan.
Moses by a written agreement excluded his personal liability on the same. In spite of the
agreement Macferlan sued Moses on endorsement. Moses was held liable despite the agreement
and he was compelled to discharge a liability which he had excluded.

Issue: Moses sued Macferlan to recover back his money.

Judgment: Moses was allowed to do so.

Lord Mansfield said that the gist of this kind of action is that the defendant upon circumstances
of the case is obliged by ties of natural justice and equity to refund the money.

The liability under Quasi contractual Obligations resembles partly law of tort as it arises
independently of any contract and partly resembles contract because it is owed or it casts a duty
or obligation upon one party and not upon persons generally.

THEORY OF IMPLIED-IN-FACT CONTRACT

We can discard the theory of Lord Mansfield and rely upon an implied-in-fact contract.

In SINCLAIR v. BROUGHAM (1914)

Facts: A building society undertook banking business which was outside its object and hence
Ultra Vires. The society came to be wound up. After paying off all the outside creditors, a mixed
sum of money was left which could either satisfy the shareholders or the ultra vires depositors.
The depositors tried to get priority by resorting to the quasi contractual action for the recovery of
the money as otherwise the shareholders would be unjustly enriched.

Judgment: the House of Lords allowed rateable (paripassu) distribution of the mixed fund
among the claimants but did not allow any remedy under quasi contracts. The court said that the
actions are caused on only two classes one is contract and another is tort. When it speaks of
action arising quasi ex contractu it refers only to a class action in theory which is imputed to the
defendant by fiction of law.

This approach dominated decisions for a long time and the decision was taken to have settled the
juridical basis of quasi-contract was the implied, notional or fictional contract.

RESTORATION OF THEORY OF UNJUST ENRICHMENT

The identification of quasi-contracts with implied contracts restricted the scope of relief which
would have been possible without any such hindrance under the principle of “natural justice and
equity”.

This problem was realized in FibrosaSpolkaAkeyjna v. Fairbairn Lawson Combe Barbour

Ltd.(1943)

Facts :A sum of money was paid in advance under a contract ‘for the supply of a machine’ or
‘for the supply of machinery’ and performance was obstructed by the outbreak of war. Their
Lordships allowed the advance to be paid back as it was paid for a consideration that wholly
failed.

Judgement : Lord WRIGHT in this case supporting the theory of unjust enrichment of Lord
MANSFIELD said, “ it is clear that any civilized system of law is bound to provide remedies for
cases of what has been called unjust enrichment or unjust benefit, which aims to prevent a man
from retaining the money of or some benefit derived from, another which is against conscience
that he should keep. Such remedies in English Law are generally different from remedies in
contract or tort and are now recognised to fall within a third category of the common law which
has been called quasi-contract or restitution.”

Hence by this judgment the theory of Unjust Enrichment was restored.

Provisions of Indian Contract Act – Chapter V of the Indian Contract Act of 1972 deals with
the Quasi Contracts. It deals with such situations under the heading ‘Of certain relations
resembling those created by contract’ .

Section 68. Claim for necessaries supplied to person incapable of contracting, or on his account.
—If a person, incapable of entering into a contract, or any one whom he is legally bound to
support, is supplied by another person with necessaries suited to his condition in life, the person
who has furnished such supplies is entitled to be reimbursed from the property of such incapable
person. 31 

Essentials of Section 68 are-

1. A person who is (i) incapable of entering into contract or (ii) anyone whom such person is
legally bound to support
2. is supplied by a third person
3. withnecessaried suited to his condition in life
4. then such third person (who has provided the supplies) is entitled to be reimbursed from the
property of such incapable person.

Illustrations
(a) A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled to be
reimbursed from B’s property.
(b) A suplies the wife and children of B, a lunatic, with necessaries suitable to their condition in
life. A is entitled to be reimbursed from B’s property.

Section 69. Reimbursement of 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.
Illustration

B holds land in Bengal, on a lease granted by A, the zamindar. The revenue payable by A to the
Government being in arrear, his land is advertised for sale by the Government. Under the
revenue law, the consequence of such sale will be the annulment of B’s lease. B to prevent the
sale and the consequent annulment of his own lease, pays the Government the sum due from A.
A is bound to make good to B the amount so paid. B holds land in Bengal, on a lease granted by
A, the zamindar. The revenue payable by A to the Government being in arrear, his land is
advertised for sale by the Government. Under the revenue law, the consequence of such sale will
be the annulment of B’s lease. B to prevent the sale and the consequent annulment of his own
lease, pays the Government the sum due from A. A is bound to make good to B the amount so
paid."

Ingredients

1. a person is interested in payment of money

2. this money by law is to be paid by a third person that is to say that the third person is bound by
law to pay it.

3. so the person who pays it will be entitled to be reimbursed by another who was actually bound
by law to pay the same.

Explanation of Ingredient:

INGREDIENT 1, the payer must be interested in making the payment. The interest which the
plaintiff seeks to protect must be legally recognisable. And even his honest belief that he has an
interest to protect is sufficient.

CASE :- GOVINDRAM GORDHANDAS SEKSARIA v STATE OF GONDAL(1950)

Facts:- The plaintiff had agreed to purchase certain mills from the respondent. During this time
the plaintiff paid the amount of already overdue municipal taxes in order to save the property
from being sold in execution.

ISSUE:- whether the plaintiff is able to recover the amount of taxes paid from the respondent.
HELD:- that by agreeing to purchase the property the plaintiff had squired sufficient interest in it
to safeguard and hence he was allowed to recover the amount paid.

So basically by interested in payment we mean that if such a payment is no made then it will
affect the interest of the plaintiff.
It is to protect his own interest that he is making the payment.
For the present case, Lord RADCLIFFE said that the company had bought the mills and if the
same were to be sold in execution for non payment of taxes then it would defeat the purpose of
its purchase.

Furthermore in the present case the person had legal proprietary interest in the property but then
the same is not a compulsory condition to be fulfilled for the application of section 69 of Indian
Contract Act of 1872.
The ambit of the section is wide enough and does not have such judicial limitation.

Ingredient 2 the person interested in payment must not be bound to pay the same.

It is necessary that the plaintiff himself must not be bound to pay, he should only be interested in
making the payment in order to protect his own interest.

Illustration 1:- suppose a person A is jointly liable with others to make a payment. So when A
makes a payment of others share as well then also he would not have the right of recovery under
this section.

CASE:- PORT OF TRUST, MADRAS v. BOMBAY Co (P) Ltd (1966)

FACTS:- The appellant, a port authority, who was under a statutory authority to pay an injured
workman had paid the workman.  Then the plaintiff sought to recover the amount from the
defendant, a contractor, whose negligence had caused the injury.

HELD:- that the port authority could not recover the amount because they were bound to pay the
same in its own independent obligation to pay.

Ingredient 3:- defendant should be under legal compulsion to pay-

The defendant should have been 'bound by law' to pay the money. The words bound by law have
been held to include statutory obligation and any obligation under a contract.

As in the case of GOVINDRAM the facts as already been discussed, the court said that the
MAHARAJA was bound to pay his money in the sense that he had made a legally enforceable
contract with SEKSARIA to pay it

Further where a person is only morally bound and is not legally compellable to pay, he will not
be bound to pay the party discharging his moral obligation.
CASE:- RAGHAVAN v ALAMELU AMMAL

FACTS:- a person before his death had gifted certain claims to the defendant. The taxing
authorities had added the claims to the estate of the deceased and  recovered the tax from his
widow despite her protests. The widow then sought to recover the amount from the defendant but
he was not held liable.
HELD:-  the defendant was not 'bound by law' to pay the same but had the taxing authority
ordered him to pay then he could have been said to be bound by law to pay the same.

INGREDIENT 4:- payment should be made from one to another-

The plaintiff should have made the payment to another person and not to himself.

CASE :- SECY OF STATE FOR INDIA v FERNANDES (1907)

FACTS:- a certain government was the tenant of a land and then the government paid to itself
out of the rent due to the landowner the arrears of land revenue due to itself.
HELD:- the government could not recover the same from landlord. The court said that 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 didnot come within the
principle  of this section

Section 70
Liability to pay for non-gratuitous acts
Section 70 creates a liability to pay for the benefits of an act which the doer did not intend to do
gratuitously.
Obligation of person enjoying benefit of non-gratuitous act-
Where a person lawfully does anything for another person or delivers anything to him not
intending to do so gratuitously 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 things done or
delivered.
Illustration
1)A, a tradesman leaves goods at B’s house by mistake. B treats the goods as his own he is
bound to pay A for them.
2) A saves B’s property from fire. A is not entitled to compensation from B, if the circumstances
show that he intended to act gratuitously.
Conditions of Liability under the section
Gajendragadkar(afterwards CJ) stated in State of W.B v B.K mondal& sons the conditions on
which the liability under this section arises-
“it is plain that three conditions must be satisfied before this section can be invoked
1) a person should lawfully do something for another person or deliver something to him
2)in doing so the said thing or delivering the said thing he must not intend to act gratuitously and
3) the other person for whom something is done or to whom something is delivered must enjoy
the benefit thereof”

“Not intending to do so gratuitously”

In case of Municipalcouncil,Rajgarh v M.P.SRTC (1991) court held that One of the purposes of
this section is to assure payment to a person who has done something for another voluntarily and
yet with the thought of being paid. A municipal corporation which constructed and maintained a
bus stand was allowed to recover some charges from the bus operators who used the stand
though there was no agreement in effect.
In case of Bihar Nurses registration council v Harendra Prasad Sinha, 1991, court held that An
employer is bound to pay for services rendered by his employees
In a case of Bank of India v Swaroop Reddy ,2001, Where a tenant bank overstayed and also did
not pay the increased rent it had acknowledged the court said under the principle of unjust
enrichment under the provisions of Section 70 of the act the court asked the defendant bank to
pay the plaintiff the entire amount of the suit claim.
Section would not encourage officious interference in affairs of others
Secondly the person for whom the act is done is not bound to pay unless he had the choice to
reject his services “if a person delivers something to another it would be open to the latter to
refuse to accept the thing and return it: in that case Section 70 would not come into operation.
Similarly, if a person does something for another it would be open to the latter not to accept what
has been done by the former in that case again Section 70 would not come into picture.
In IBID haji adamsaitdharmasthapanam v hameed ,1985 court held that a person is said to be
liable under Section 70 where he voluntarily accepts the things or enjoys the work done.
Court in Muthu raman v chhinnavellayan 1916 observed that this rule cannot be used by
anybody to make officious interference in the affairs of the otherand the other being the court
will not compel a person to pay for services which have been thrust upon him against his will.
Request for services creates implied promise to pay
Thirdly it is necessary that services should have been rendered without any request. Reasonable
compensation may, however be recovered for services rendered at request. Supreme Court in
State of W.B v B.K. Mondal& sons. The Plaintiff on the request of an officer of the state of west
Bengal constructed a kutcha road, guard room, office, kitche , room for clerks , and storage sheds
for the use of the civil supplies department of the government. The state accepted the works but
tried to escape liability under the pretence that no contract had been concluded in accordance
with the requirements of Section 175(3) of the Government of India Act, 1935. 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 rupees 19325.
GAJENDRAJADKAR J ( afterward CJ) examined the conditions and found that all satisfied by
the facts and therefore held the state liable. No doubt that the state eve after having requested for
the works had the right to reject. It could have called upon the contractor to demolish the storage
sets and take away the material used : but if the state accepted the storage sheds and used them
and enjoyed their benefits then different consideration come into play and Section 70 can be
invoked.

Principle of this case has been reaffirmed by the SC in PilooDhunjishawSidwha v Municipal

Corpn of City of Poona, 1970 here too the corporation tried to escape liability for spare motor
parts supplied to it on the ground that the contract was not made in accordance with the Bombay
Municipal Corporation Act,1949. But the corporation was held liable to pay under Section 70.
Shah J ( afterward CJ ) cited with approval the decision of the Lahore high court in Secy of State
v G.T. Sarin & Co where it was held that “ a person without an enforceable contract in his favour
supplying goods to a government department is entitled to a money equivalent of the goods
delivered assessed at the market rate prevailing on the date on which the supplies were made”.
Present case the rates quoted by the supplier in his invoice were considered to be fair measure of
compensation giving the state the right to show that the market price was less than that but the
corporation did nothing in this respect. Thus though the claim under section 70 is not based upon
any contract yet the contract between the parties is relevant at least for indicating the fair
measure of compensation.
Recovery under oral or non-provable contracts
A highway work was allotted on emergency bases work sanctioned by the superintending
engineer. But no allocation of funds was made. The work was completed. It was held that the
state could not leave the contractor high and dry. The state compensate him. The amount as
sanctioned and recommended must be paid. Technicalities should not come in the way of
substantive work.
The SC has further held that where a contractor whose work has been accepted by the other party
claims compensation under an oral agreement which he is not able to prove he would still be
entitled to compensation under section 70. In another case the SC held the government liable to a
person who on the instructions of the government transferred the steel allotted to him in excess to
a third person who failed to pay.

“lawfully does”
Fourthly , services should have been rendered lawfully. Commenting upon this in State of W.B.
v B.K. Mondal& Sons, the SC has said that the word “lawfully” is not a surplusage and must be
treated as an integral part of section 70 and even if it is taken to refer to an object of
consideration which is forbidden by section 23 of the contract act, it cannot be taken to mean as
requiring to state to pay under section 70 for the services which it has enjoyed was something
forbidden by section175(3) of the government of India Act,1935.
It has been a point of emphasis that between the person claiming compensation and the person
against whom it is claimed, some lawful relationship must exist and it should arise by reason of
the fact that what has been done for the former has been accepted and enjoyed by the latter.
Acting on this, the Orissa high court allowed a person to recover what he had paid to another for
purchasing his paddy not knowing at the time that his purchase was in violation of a state control
order.
Where a teacher due for retirement at the age of 55 obtained a stay order contenting that he was
entitled to work up to 60 and remained in service beyond 55 before the matter was decided
against him he was allowed to recover the monetary benefits of his entitlement for the
overlapping period .His conduct was not unlawful.
Lender of money
In Narayan VenkateshPandit v Syed NuroddinKhadri (1999) -A party admitted receipt of money
as a loan. The transaction was oral, wholly dependent upon the faith reposed by the lender. The
court said that it could direct the borrower to pay back the money at appropriate interest it was
not material that there was no stamp paper acknowledging receipt of money.
In Governor general in council v Madura municipality (1948) Court deals with the Enjoyment of
the benefit –Lastly the defendant must have derived a direct benefit from the payment or
services. Where the works done by a railway company developed the adjoining land and
consequently the municipality received more taxes, this was held to be not a sufficient benefit to
enable the railway company to recover compensation from the municipality.

Section 71
Section 71 lays down the responsibility of a finder of goods.
Responsibility of finder of good-A person who finds goods belonging to another and takes them
into custody, is subject to the same responsibility as a bailee. Thus in respect of duties and
liabilities a finder is treated as at par with a bailee the finders position is thereof considered along
with bailment.
The SC has ruled in Union of India v Amar singh,1960 that the statutory fiction by which a
contract of bailment is inferred between a finder of goods and the real owner should not be
enlarged by analogy or otherwise and, therefore a railway authority which took into custody
wagons containing the plaintiffs goods and which were left across the border in Pakistan became
the contractual bailees of goods and it was not necessary to regard them as finders within the
meaning of section 70.
SECTION 72 OF INDIAN CONTRACT ACT, 1872
72. Liability of person to whom money is paid, or thing delivered, 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. —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 100 rupees to C, A alone pays the amount to C, and B, not knowing this
fact, pays 100 rupees over again to C. C is bound to repay the amount to B.
(b) A railway company refuses to deliver up certain goods to the consignee except upon the
payment of an 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 charge as was illegal and excessive.
MISTAKE OF FACT OR OF LAW
What is mistake of fact?
It includes erroneous beliefs about the meaning of some term or about the identity of some
person. In criminal law, a mistake of fact can usually operate as a defense so long as it is
reasonable.
What is mistake of law?
Mistake of law is a legal principle referring to one or more errors that were made by a person in
understanding how the applicable law applied to their past activity that is under analysis by a
court.
Money is recoverable under Section 72 if it is paid by mistake, irrespective the mistake was of
law or of facts. This was laid down in the case of Sri SriShiba Prasad Singh vs. Maharaja Srish
Chandra Nandini by the Privy Council as follows:
“Payment "by mistake" in Section 72 must refer to a payment which was not legally due and
which could not have been enforced: the "mistake" is thinking that the money paid was due when
in fact it was not due. There is nothing inconsistent in enacting on the one hand that if parties
enter into a contract under mistake in law, that contract must stand and is enforceable, but on the
other hand that if one party acting under mistake of law pays to another party money which is not
due by contract or otherwise, that money must be repaid. Moreover, if the argument based on
inconsistency with Section 21 were valid, a similar argument based on inconsistency with
Section 22 would be valid and would lead to the conclusion that Section 72 does not even apply
to mistake of fact…. It may be well to add that their Lordships’ judgement does not imply that
every sum paid under mistake is recoverable, no matter what the circumstances may be. There
may be in particular case be circumstances which disentitle a plaintiff by estoppel or otherwise.”
REFUND OF TAX MONEY WITHOUT BEING DUE
The English, American and Australian Laws do not allow recovery of payments made under
mistake of law. However, in India Bhagwati J. has rejected this convention in the case of Sales
Tax Officer v Kahaiya Lal Mukund Lal Saraf. The facts of the case were as follows:
A certain amount of sales tax was paid by a firm under the U.P. Sales Tax law on its forward
transactions and subsequently to the payment, the Allahabad High Court rules the levy of sales
tax on such transactions to be ultra vires. The firm sought to recover back the tax money.
It was stated that:
“The section does not make any distinction between a mistake of law or a mistake of fact. The
term ‘mistake’ has been used without any qualification or limitation whatever.” The section is
clear and unambiguous and no consideration can be imported even if the receiver of the money
no longer has it with him or cannot be considered as still having it, as in a case where he has used
it for his own purposes.

SCOPE OF THE WORD ‘MISTAKE’ IN CONTEXT OF OVERPAID TAXES

The scope is further exemplified in the case of TilokchandMotichand vs. H.B. Munshi. The facts
of the case are as follows:
A frim paid sales tax of more than twenty thousand rupees in respect to sales of consumers
outside the state of Bombay and who were not subject to the sales tax. The amount was ordered
to be refunded and a cheque was given to the firm subject to the condition that within one month
it should produce receipts showing that the refund had been passed over to the consumers. The
firm failed to do so and was, therefore, informed to return the tax money to the State failing
which it would be recovered as arrears of the land revenue. The firm petitioned against the
Bombay High Court but lost it. It paid back the amount only when it received an order of
attachment.
When all this was going on but unknown to the firm, the Act under which the recovery was made
from the firm had been declared by the Supreme Court to be ultra vires. The firm sought to
recover back the money as having been paid under either mistake of law or coercion.
The court considered the view of ‘mistake’ meaning thinking the money was due but in reality
was not due, taken in the previous decisions of Privy Council and the Supreme Court and held
that the firm in this case did not suffer from any mistake as it knew the legal position and the
money was due until the Act was passed. However, the court held the payment was made under
coercion and hence was recoverable under section 72 of the Indian Contract Act if the case was
filed within the period of 3 years which is set as the limitation. But since the case was filed after
more than 3 years and the period expired and the majority laid that the State was better entitled to
the money which belonged not to the firm but to its customers.
In the case of R.Parthasarthy vs. Depsi Chemicals it was laid down the refund could not be
cancelled on the grounds that the refund would unjustly enrich the plaintiff. Here on the payment
of excise duty the Excise Commissioner declared that no duty was payable on those goods.
In another case of N.V. Ramaiah vs. State of A.P. the decision was contrasted where the fee
collected from the consumers on the sale of denatured spirit the refund was rejected, even though
the fee was illegal because it would enrich the seller at the cost of various buyers whom he
would not have been able to pay back.

Therefore, for the refund of money paid as taxes following essentials are required:
1- There should be mistake or coercion
2- Mistake can either be of law or of facts, no distinction is required.
3- The claim should be made by filing a case within the limited period of time specified that
is of 3 years.

LIMITATIONS AND LATCHES

The recovery proceedings are generally instituted by the way of writ petitions. There is no period
of limitation applicable to writs just there should not be unreasonable delay amounting to latches.
The period of limitation will not start until the mistake is been found out or discovered by the
applicant or could have discovered with reasonable diligence.
In case of ChrisineHoden (P) India Ltd. Vs. N.D. Gadag, (1993), the recovery was not rejected
when the claim was laid within the mistake of law was discovered.

OTHER EXAMPLES OF MISTAKE

In S. Kotrabasappa v Indian Bank the customer was asked to pay back the bank with interest (the
Interest Act) when there was a mistaken credit entry in his account and he withdrew the amount.
Where the rice millers received extra amount because of a mistake in classification according to
quality they were required to disgorge the unjust enrichment. This was the case of Food
Corporation of India vs. K. Venkateswara.
Where a sum was paid to the bank as the price of the goods and the bank issued the delivery
orders which were not accepted by the warehouse keeperthe Calcutta High Court held this was
not a payment by mistake and hence section 72 was not applicable. Case of Lohia Trading co. vs.
Central Bank of India.
Where the railway authorities charged extra fare under the mistaken belief that the goods would
have to be carried by a longer route, they were ordered to refund the extra fare. The case of
Associated Cement Co. Ltd. vs. Union of India.
When a person seeks recovery of money paid under a mistake of law, it is not necessary to
establish that he had mistakenly believed that he was liable to make the payment. He has only to
show that the mistake was directly connected with the overpayment or connected to the
relationship between the payer and the payee.
The principle of unjust enrichment does not permit even the Government and its agencies of
taking advantages of such errors. This was held in a case where KisanVikas Patra purchased by a
Cooperative Bank unknown of the fact that such banks were not allowed to do so under the
Government Savings Certificates Act, 1959, the post office also remained oblivious to the
restriction. It was held the Post Office could not refuse interests accrued up to the date of
maturity.

DISCOVERY OF MISTAKE AFTER A LONG PERIOD

It was laid down in the case of Radha Flour Mills P Ltd. vs. Bihar State Financial Corporation,
2007 that money cannot be recovered after a long period as it would be unjust enrichment at the
cost of the other and also penalty for the fault of the creditor. In this case there was an accounting
error committed by the corporation in the recovery of loan and the interest. The mistake was
realised after more than a decade. And attempt was made for the recovery of amount and the
interest.

CHANGE OF POSITION BY PAYEE IN RELIANCE ON PAYMENT

ACCEPTANCE OF LESS SUM UNDER COURT ORDERS
In a contract for supply of gas, the seller’s attempt to increase prices was challenged. The court
directed by an interim order that the supply should be continued at original prices. The proposed
enhancement was finally found to be valid. It was held that the consumers were liable to pay the
differences in prices since the first notice of escalation and also the interest on delayed payments.
The court applied the principles deemed renewal and restitution. The terms of the original
contract had expired. No new contract could be made because of the consumers’ refusal to accept
the new price. The continuance of the supply and its acceptance by the consumers under the
court order became the foundation of the deemed renewal. This was the case of ONGC vs. Assn
of Natural Gas Consuming Industries.

COERCION
The word ‘coercion’ is used in its general sense and not as it is defined in section 15 of the Act.
That is it means the use of power or force. Examples can be money paid under pressure of
circumstances, such as prevention of the execution of a decree on a property in which the party
paying is interested, may be recovered even though the coercion as defined in the section is not
established.
Where the subsequent purchaser of a property was asked to pay for the electricity bills of the
previous owner by refusing to supply electricity unless they’re paid. It was held to be unjust
enrichment by depriving a man of his money without authority of law.
Voluntary Payments
Payments made under mistake of facts
Payments made under the mistake of fact can be recovered if the party paying would have been
liable to pay if the mistaken facts were true. In Morgan vs Ashcroft, the respondent is a book-
maker. The plaintiff is a publican who was a regular customer of the respondent for betting
transactions. The nature of the mistakes which led to the alleged overpayment of about £24 upon
which the action was brought, was proved in evidence to have been a clerical error by the
respondent’s clerk which led her to give the appellant credit for the sum of about £24 twice over;
thus causing the respondent to pay to the appellant £24 too much.
The action to recover back the overpayment was lost on two grounds:
- The court was forbidden by the Gaming Act, 1845, from looking into betting transactions
and
- Even if the mistaken overcredit were taken to be true, there would have been no liability
to pay.
Payments made under an Ineffective Contract
Three kinds of situations are considered in payment under an ineffective contract. They are total
failure of consideration, money paid under void contract and money paid under an illegal
contract.
Total failure of consideration= where one party has paid the money in the performance of his
part but the other fails to do so. Here the former has two options that are, either to sue the other
for breach of contract or to treat the contract as at an end and recover back his money under
quasi-contract.
To recover the money paid there must be total failure of the consideration rather than partial
failure.
Example of total failure of consideration, Wilkinson vs Lloyd, a shareholder of a company
transferred his shares to the plaintiff for which the price was paid, but the company on account of
certain conduct on the part of the transferor himself refused to register the transfer of his shares,
and the plaintiff was allowed to recover back his price.
Example of partial consideration, Whincup vs Hughes, a boy was registered as an apprentice
with the watchmaker for a period of six years in payment of a premium and the master died when
the boy had learned only for one year, he could not recover any part of the premium, there being
only a partial failure of the consideration.
Payments made under compulsion
Recovery is allowed where there is payment done under improper pressure or compulsion
enforced by the other party, as in Maskell vs Horner, where the owner of a market realised tolls
from a shopkeeper by seizing his goods and which later was held that he had no authority to do
so.
Also there would be no recovery if the payment is in response to summons issued by a court of
law but payments extorted under colour of authority which is unfounded are recoverable.
QUANTUM MERUIT
When a party has done some work or rendered services in the performance of his contract and
the further performance has been made useless the other party, he may recover reasonable
compensation for the work or service. The case Plinche vs Colburn is an authority of this
principle.
Where the plaintiff was the author of several dramatic entertainments. He was engaged by the
defendants, who were the publishers of a work called “The Juvenile Library” to write for that
work an article to illustrate the history of armour and costumes from the earliest times,for which
he was to be paid 100 guineas. The plaintiff made various drawings and prepared a considerable
proportion of manuscript when the defendants discontinued the Juvenile Library. The plaintiff
claimed a sum of 50 guineas for the part which he had prepared, and the trouble he had taken in
the business. He was held entitled to it.
Claims of this kind does not depend upon implied contract arising by virtue of the services
having been accepted or upon inference of law, but upon rule of law.
Where a ship was delivered for repairs and the contractor used more expensive material than the
authorised contract, he could not recover under the contract because he had not carried it out
precisely, nor under quasi contract, because the ship owner had no chance to reject the expensive
material.
Where adequate relief is available under the contract itself, the court may not provide any relief
under quasi-contract.