Definition of Quasi-Contract (Section 68-72)

Sometimes, the law imposes obligations on a person that resemble those created by a contract, even though there is no actual contract between the parties in the traditional sense (i.e., no offer, acceptance, consideration, etc.). These obligations are known as Quasi-Contracts or "certain relations resembling those created by contract". The Indian Contract Act, 1872 deals with these obligations in Chapter V (Sections 68 to 72).

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Obligations resembling those created by contract

Sections 68 to 72 describe various situations where the law creates a legal obligation on one party to compensate another, even without a formal agreement. These obligations are not based on consent or agreement of the parties, but are imposed by law to prevent unjust enrichment.

The Act does not explicitly define "quasi-contract" as a single term. Instead, it describes the specific circumstances where such obligations arise and calls them "certain relations resembling those created by contract". These sections cover specific scenarios:

Section 68: Claim for necessaries supplied to person incapable of contracting, or on his account.

As discussed under Capacity to Contract, if necessaries are supplied to a minor or person of unsound mind (or their dependents), the supplier is entitled to be reimbursed from the property of such incapable person. This is not based on the minor's promise to pay (which is void) but on a legal obligation to prevent the minor from benefiting from the necessaries without payment.

Section 69: Reimbursement of person paying money due by another, in payment of which he is interested.

If 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. The payment must be made to protect one's own interest.

Example: A is a tenant of a landlord, B. C is a superior landlord to B. C demands arrears of rent from B. If C threatens to auction A's property for non-payment by B, A can pay the rent due to C to protect his property. A is entitled to recover this amount from B.

Section 70: Obligation of person enjoying benefit of non-gratuitous act.

If a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously (i.e., expecting payment), 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 thing so done or delivered.

Essentials of Section 70:

• Something is done for another person or delivered to them.
• The act/delivery is done lawfully.
• The intention is not to do it gratuitously (i.e., with expectation of payment).
• The other person enjoys the benefit of the act/delivery.

Example: A, a tradesman, accidentally delivers goods to B's house, mistaking it for C's house. B consumes the goods. B is bound to pay A for the goods.

Example: A saves B's property from fire, not intending to do so gratuitously. B enjoys the benefit of his property being saved. B is bound to compensate A.

Section 71: 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.

The finder has a duty to take reasonable care of the goods, try to find the true owner, and return the goods to the true owner. They do not become the owner of the goods. They can incur expenses in preserving the goods and finding the owner, and may have a lien (right to retain possession) for these expenses, but generally cannot sell the goods unless under specific circumstances.

Section 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.

Example: A pays money to B by mistake, believing that the money was due to B. A is entitled to recover the money from B. B cannot keep money received by mistake.

Example: A railway company refused to deliver goods unless a sum for carriage was paid which was not legally due. The consignee paid the sum to obtain the goods. He is entitled to recover the excess amount paid under coercion.

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Based on the principle of restitution and equity

The basis of quasi-contractual obligations is not a contract implied in fact (derived from the presumed intention of the parties), but a contract implied in law or constructed by law. The fundamental principle underlying these obligations is Restitution or Unjust Enrichment. The law imposes these obligations to prevent one party from being unjustly enriched at the expense of another.

The principle is rooted in justice and equity: it would be unfair and against good conscience to allow one person to retain a benefit conferred upon them by another, where the conferral of the benefit was not intended to be gratuitous and it would be unjust for the recipient to keep it without compensation.

The remedies available in quasi-contract are typically limited to restitution (repayment of money, return of goods) or compensation for the benefit received. It is not about enforcing a promise, but about preventing unfair gain.

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Claim for necessaries supplied to person incapable of contracting (Section 68)

This section creates a quasi-contractual obligation to protect those who supply essential goods or services to persons who cannot legally enter into contracts, specifically minors and persons of unsound mind.

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Rule under Section 68

"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."

Explanation:

• Incapable Person: This refers primarily to minors and persons of unsound mind, who are incompetent to contract under Section 11.
• Person Legally Bound to Support: This includes dependents of the incapable person whom they are legally obligated to support (e.g., a minor's wife or children, if any).
• Necessaries: As discussed previously, necessaries are not just basic survival items, but include things required for the person's maintenance, education, health, and reasonable comfort according to their status and circumstances in life. They must be 'suited to his condition in life'.
• Supplied by Another Person: The necessaries must be supplied by a third party (the supplier).
• Entitled to be Reimburse from Property: The supplier can only recover the cost of the necessaries from the property or estate of the incapable person. The incapable person is not personally liable, and if they have no property, the supplier cannot recover anything under this section.

Example: A supplies a minor, B, with essential school fees, uniform, and textbooks. A can recover the cost of these items from B's property (e.g., inherited money or assets), but cannot sue B personally.

The basis of this obligation is the prevention of unjust enrichment; the incapable person has received a benefit of essentials, and it would be unfair to allow them to keep this benefit without payment from their estate.

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Reimbursement of person paying money due by another, in payment of which he is interested (Section 69)

This section deals with situations where a person is compelled by law to pay money which is actually due by another person, and the payer has an interest in making that payment.

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Rule under Section 69

"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."

Explanation:

• Payer is Interested: The person making the payment must have a legal interest in the payment being made. This interest is usually related to protecting their own property, rights, or position. The interest must be legally recognized, not merely a sentimental or indirect interest.
• Payment of Money: The payment must be of a sum of money.
• Due by Another: The money must be legally due by another person (the defendant) to a third party. The defendant must be legally bound to pay it.
• Payer Pays It: The plaintiff makes the payment.
• Entitled to be Reimburse: The plaintiff is entitled to recover the amount paid from the person who was legally bound to pay it.

Example: 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 annulment of his own lease, pays to the Government the sum due from A. B is entitled to recover the amount from A. Here, B has an interest in protecting his lease, A was legally bound to pay the revenue, and B pays it to protect his interest.

The payment must be one which the other party (defendant) was legally bound to pay to a third party. Payment of a purely voluntary nature or payment of money not legally due does not fall under this section.

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Obligation to make restitution of benefit obtained or compensation for loss caused (Section 70)

This section is perhaps the broadest provision dealing with quasi-contracts in the Indian Contract Act. It covers situations where a person benefits from a non-gratuitous act done by another lawfully.

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Rule under Section 70

"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 thing so done or delivered."

Acts done by a person not intending to do so gratuitously

Explanation:

• Lawfully Does/Delivers: The act done or thing delivered must be lawful. It should not be something done against the will or without the knowledge of the other party in a way that makes it unlawful interference.
• Not Intending to Do Gratuitously: The person performing the act or delivering the thing must have done so with the expectation of being paid or compensated. If the intention was to do it as a gift or favour (gratuitously), this section does not apply. The expectation of payment can be express or implied from the circumstances or the nature of the act (e.g., a professional service is generally not gratuitous).
• Other Person Enjoys the Benefit: The other person must have actually benefited from the act or delivery. The benefit must be enjoyed.
• Bound to Make Compensation/Restore: The person who enjoyed the benefit is obligated to either compensate the other party for the value of the act/thing or restore the thing received. The amount of compensation is for the benefit enjoyed.

Example: A, a coolie, carries B's luggage to the railway station without being asked by B. B follows him and allows him to do so. B is bound to pay A for the service. Here, A's act is lawful, not gratuitous, and B enjoys the benefit.

Example: A saves B's property from fire. It's lawful. If A is a professional firefighter, it's not gratuitous. If B's property is saved, B enjoys the benefit and might be bound to compensate A (though firefighters often perform a public duty, which might affect the 'not gratuitous' element in that specific context).

Section 70 is based on the principle of unjust enrichment: it would be unfair for a person to benefit from another's non-gratuitous work or goods without providing compensation.

Distinction from Contract: In Section 70, there is no prior agreement or offer and acceptance. The obligation arises from the subsequent acceptance and enjoyment of a benefit conferred by a non-gratuitous act.

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Responsibility of Finder of Goods (Section 71)

This section imposes certain obligations on a person who finds goods belonging to another.

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Rule under Section 71

"A person who finds goods belonging to another, and takes them into his custody, is subject to the same responsibility as a bailee."

Explanation:

• Finder of Goods: The person who discovers goods that do not belong to them.
• Takes into Custody: The finder must take the goods into their possession and control.
• Subject to Responsibility of a Bailee: A bailee is a person to whom goods are delivered by another for a specific purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them (Section 148). While there is no contract of bailment between the finder and the true owner, the law imposes the same duties and responsibilities on the finder as if they were a bailee.

Duties of the Finder (similar to Bailee's duties under Sections 151, 152, 153, 160, 161):

• Duty of Care: The finder must take as much care of the goods as a person of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality, and value (Section 151, 152).
• Duty not to use the goods.
• Duty to return the goods: The finder must return the goods to the true owner when found (Section 160).
• Duty not to mix the goods with his own.
• Duty to take steps to find the true owner: The finder must make reasonable efforts to discover the true owner.

Rights of the Finder (Sections 168, 169):

• Right to expenses: The finder is entitled to recover from the true owner all reasonable expenses incurred in preserving the goods and in finding the owner.
• Lien: The finder has a lien on the goods (right to retain possession) until reimbursed for such expenses. They cannot sue for such expenses, but can refuse to return the goods until paid.
• Right to Reward: If the true owner has offered a specific reward for the return of the goods, the finder may sue for the reward and also has a lien on the goods for the reward (Section 168).
• Right to Sell (Limited): The finder can sell the goods in very limited circumstances, such as if the goods are perishable, or if the owner cannot be found after reasonable efforts, or if the owner refuses to pay the lawful charges, provided the value of the goods exceeds Rs. 100 (Section 169). The finder is entitled to recover expenses from the sale proceeds and must pay the surplus to the true owner.

Section 71 creates a relationship resembling bailment, based on the principle that the finder should not appropriate goods that are not theirs and should be compensated for their efforts in finding and preserving the goods.

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Liability of person to whom money is paid or thing delivered by mistake or under coercion (Section 72)

This section prevents a person from unfairly retaining money or goods that they received due to another's mistake or under compulsion.

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Rule under Section 72

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

Explanation:

• Money Paid or Thing Delivered: This covers both tangible items and monetary amounts.
• By Mistake: The payment or delivery must have been made under a mistake. The mistake can be a mistake of fact or a mistake of law. The landmark case of State of West Bengal v. M/s. B.K. Mondal and Sons AIR 1962 SC 779 confirms that 'mistake' in Section 72 includes mistakes of law.
• Under Coercion: The payment or delivery must have been made under coercion (as defined in Section 15 or in a broader sense of compulsion or illegal pressure).
• Must Repay or Return: The recipient of the money or thing is legally obligated to return it to the person who paid or delivered it.

This section is also based on the principle of unjust enrichment. The recipient has no legal right to retain money or property received due to another's error or under compulsion.

Example (Mistake): A pays his house tax to the Municipal Corporation twice by mistake. A is entitled to recover the excess amount paid from the Corporation under Section 72. The Corporation cannot retain the money received by mistake.

Example (Mistake of Law): A pays money to B under a contract that is later discovered to be void due to a mistake of law. A can recover the money from B under Section 72.

Example (Coercion): A transports goods for B. A wrongly claims a higher amount for freight and refuses to deliver the goods unless B pays the inflated amount. B pays the extra amount under this compulsion to get his goods. B can recover the excess amount from A under Section 72 as money paid under coercion.

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