INDIAN CONTRACT ACT 1872 : QUASI

CONTRACT

NAME – AISHNA GARG

ROLL NO. – 1429
YEAR-2021
SEMESTER – 1
SUBJECT – BUSINESS LAW
EMAIL ID –
aishnagarg2002@gmail.com
CONTACT NO. – 9873869349
 QUASI CONTRACT : Q

MEANING
• QUASI means almost or apparently but not really and CONTRACT means agreement
enforceable by law.

• A QUASI CONTRACT is not a contract at all because the essential elements for the
formation of a contract are absent. It is an obligation imposed by law upon a person for
the benefit of another even in the absence of contract .

• It is based upon principle of EQUITY.

EXAMPLE
A doctor is driving down the highway and finds B lying in unconscious state on the right side of the road. He stops his car and
administers emergency treatment that saves B s precious life. Even if B , the victim was not aware that the services had been rendered
by the doctor , yet he received a valuable benefit. Here the requirements of quasi contract fulfilled and therefore B is under an obligation
to pay for it to the doctor. If B fails to do so , the court can apply the doctrine of quasi contract and order B to pay A
 QUASI CONTRACT : RATIONALE
• Quasi Contracts are based on the doctrine of ‘unjust
enrichment’, that is enrichment of one person at the cost of
another .

• Law of quasi-contracts is also known as law of restitution.

Section 73 of the act

provides that, “When an obligation resembling those created by contract has been incurred and
has not been discharged, any person injured by the failure to discharge it, is entitled to receive
the same compensation from the party in default, as if such person has contracted to discharge it
and has broken his contract .
 CASE LAW : MOSES VS MACFERLAN
FACTS
A issued four promissory notes to B and the latter endorsed them to C. The agreement
provided that B shall not be liable on the endorsement. Even then C sued B on the
endorsement. Held, B was liable despite the agreement. B was thus compelled to discharge
his liability which was excluded by him but he sued to recover back his money. He could
get back his money under the law. In this case Lord Mansfield observed that, The gist of
this kind of action, is that defendant, upon the circumstances of the case, is obliged by the
ties of natural justice and equity to refund the money.
KINDS OF QUASI Su
pp
inc ly of
CONTRACT o m ne
p et ces
ent sar
per ies
son to
s
SECTION
68
Responsibility of
finder of goods
SECTION Payment by an
SECTION 69 interested
72 person
KINDS

SECTIO SECTION
Money paid o
r goods
N 71 70
istake or
delivered by m Obligation of a person
n
under coercio enjoying benefit of non-
gratuitous act
SUPPLY OF NECESSARIES TO INCOMPETENT
PERSONS

If a person, .incapable of entering

into a contract, or anyone whom he
SECTION 68
is legally bound to support is
supplied by another person with
Supply of
necessaries to necessaries suited to his condition
Incompetent in life, the person who has furnished
Persons such supplies is entitled to be
reimbursed from the property of
such incapable person.
 EXAMPLES

A supplies the wife

A supplies B, a
and children of B, a
lunatic, with
lunatic, with
necessaries suitable
1. 2. necessaries suitable
to his condition in
to their condition in
life. A is entitled to
life. A is entitled to
be reimbursed from
be reimbursed from
B’s property.
B’s property.
PAYMENT BY AN INTERESTED
PERSON
.
SECTION 69
A Person who is interested in
Payment by an
the payment of money which
interested party another is bound by law to
pay and who therefore pays it
, is entitled to be reimbursed
by the other
 The payment should have
been made to another The plaintiff must be
person and not to himself interested in making the
payment

Conditions for
applicability of
The plaintiff himself Section 69 The defendant should
should not be bound to have been ‘legally bound
pay by law’ to pay

Certain land was held on lease by the forest department of the government. Arrears of revenue were due for the landlord. The
revenue department advertises his land for sale. The forest department made payment of the revenue . Held, the payment was
made by one department of the Government to another department of the government and as such it was not a payment made
to another person. It could not be recovered under Sec 69.
CASE LAW : BROOK’ S WHARF vs
GOODMAN BROS. (1937)

Facts

W was a owner of a godown. G imported certain goods and kept

them in the godown. The goods were stolen without any negligence
on the part of W. The authorities made a demand on W for the
payment of custom duties which W paid. Held, W could recover
the amount from G under Section 69.
 CASE LAW : TULSA KUNWAR VS
JAGESHWAR PRASAD (1906)

Facts

A's goods were wrongfully attached to realize the arrears of

government revenue due by B.A paid the dues to the
Government to save na property. Held, he was entitled to
recover the amount from B
OBLIGATION OF A PERSON ENJOYING
BENEFIT OF NON GRATUITOUS ACT

SECTION 70
When a person. lawfully does anything
for another person, or delivers anything
Obligation of a
person enjoying to him, not intending to do so
benefit of non- gratuitously and such other person
gratuitous act 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.
It may be noted that section 70 is not applicable in case of persons who are incompetent to contract, e.g, minors etc.
Therefore, they are under no obligation to compensate the other party for any benefit derived by them. Thus both the
parties must be competent to contract .

For the application of the section , the following 5 conditions must be satisfied -

1
1 3
2
2 3 5
4
4 5
 EXAMPLES
A, a tradesman,
leaves goods at
B’s house by
mistake. B treats
the goods as his
own. He is bound
to pay for them.
A saves B’s property
from fire, A is not
entitled to claim
compensation from B,
if the circumstances
show that he intended
to act gratuitously.
RESPONSIBILITY OF FINDER OF GOODS

● A person who finds goods

belonging .to another and takes
SECTION 71
them into his custody, is subject
to the same responsibility as a
bailee.
Responsibility of finder of
goods
● Although there is no agreement
between the owner and finder of
the goods, the law implies an
agreement between the two and
this section places the finder in
the same position as that of a
bailee.
Obligations of finder of lost goods
1. To take reasonable care
of goods as a man of
ordinary prudence would
take care of his own goods
2. To take care all
necessary steps to trace its
true owner
3. Not to make use of those
goods
4. To return the goods to
the true owner , if found
1. To keep possession of
goods as against everyone
except the true owner
2.To make claim for
expenses incurred by him
Rights of finder of goods
for maintenance of goods
3. To sue the owner for
reward if any
4. To exercise right of lien
over the goods for expenses
and reward. But he cannot
sue the owner for these
expenses
CASE LAW : HOLLINS vs FOWLER

Facts: H picked up a diamond from the floor of F's shop and handed
it over to him. Inspite of best efforts the owner could not be found
out. After some weeks, H tendered to F the lawful charges incurred
by him for finding the true owner and asked him to return the
diamond to H, but F refused to do so. Held, F must return the
diamond to H as H was entitled to retain it against the whole world
except the true owner.
MONEY PAID OR GOODS
DELIVERED BY MISTAKE OR
UNDER COERCION
SECTION 72
Money paid or goods
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.
● Payment under mistake in this
section means the payment which
was not legally due. Money was
paid thinking it was due but in
fact it was not due.
 EXAMPLES
A and B jointly owe Rs 100 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.
A railway company refuses to deliver
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.
DO YOU KNOW ?
This section covers those cases where
money is paid under threat of attachment of
property. Similarly, money paid, under
protest on getting threat from the
Government that on failure's to pay the
facility (e.g, electricity or water) will be
withdrawn, can be claimed under coercion
in this section. The mistake in this section
includes within its scope a mistake of law
as well as mistake of fact. This Section
does not apply where payment has been
made for time barred debt. Similarity,
money paid knowingly fully well that
contract had become void i.e, the payment
made in disregard of law, does not fall
within the purview of this section.
 CASE LAW : Sales Tax Officer, Benaras
VS Kanhiya Lal Mukund Lal Saraf

Facts
K had paid sales tax on his forward transactions under the U.P. Sales
Tax Act. Subsequently the levy of sales tax was held to be ultra vires by
the High Court of Allahabad. K claimed the refund of the tax under
mistake of law under Section 72 of the ICA. Held that Section 72 did not
draw distinction between mistake of law and mistake of fact and
therefore K was allowed the refund of payment
THANK YOU