Short notes on the Types of Quasi Contract

The Indian Contract Act deals with the following types of ‘quasi-contracts’ as discussed in Sees. 68 to 72.

1. Necessaries supplied to a person incapable of contracting or on his behalf (Sec. 68):

If a person incapable of entering into contract or anyone whom such incapable person is legally bound to support, is supplied by another person with necessaries suited to his conditions in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person.

Examples:

(1) A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled to be paid out of B’s property.

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

It should be noted that the liability of the minor is not personal, only his property is liable. If such incapable person has no property, payment cannot be recovered.

2. Reimbursement of person paying money to another in the payment of which he is interested (Sec. 69):

If a person who is interested in the payment of money which another is legally bound to pay, pays it, he is entitled to be reimbursed by that other.

Example:

B holds land in Bengal, on a lease granted by A, the Zamindar. The revenue payable by A to the Government being in arrears, his land is advertised for sale by the Government under the revenue law. The consequences of such sale will be the termination of B’s lease. B, to prevent the sale and the consequent termination of his own lease, pays to the Government the sum due from A. A is bound to return to B the amount paid by B.

Quasi-Contracts

The essential rules of Sec.59 are as follows:

(i) A person should be interested in the payment:

Payment must have been made bona fide for the protection of one’s own interest. The interest should exist at the time of payment. If the person making the payment has no interest, he cannot recover the payment.

Examples:

(1) Goods belonging to A were wrongfully attached in order to realize arrears of Government revenue due to B. A, therefore, paid the Government revenue to save the goods from attachment. The Court held that A was entitled to recover the amount as A was interested in the payment. [Abid Hussain v. Ganga Sahai].

(ii) A purchased certain goods on credit. B, a friend of A, paid the amount on behalf of A without ‘A’s consent. B cannot recover the amount as B is not interested in the payment.

(iii) Another person must be bound by law to pay:

In the first illustration, B is bound by law to pay revenue to the Government.

(iv) The person paying the amount must not be bound himself to pay the amount:

Again, the person paying should not even jointly be liable to pay the amount. Thus the liability to pay must be of the person on whose behalf the payment was made. In the example (a) given below, the liability to pay is of B alone.

(v) The payment must be made to some third party.

Example:

Certain land was held on lease by the forest department of the Government. Arrears of revenue were due from the landlord. The land was advertised for sale in order to realize the arrears. The forest department made the payment to save the land from being sold.

It was held that the Government made the payment to itself, it could not recover the sum from the landlord. In this case, the payment was not made to any third party but by one department of the Government to the other department. Hence the Government could not recover under this section. Payment can be recovered under this section only if it has been made to a third party. [Secretary of State v. Fernandes],

5. Obligation of person enjoying benefit of non-gratuitous act (Sec.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 thereof, or to restore the thing so done or delivered.

Examples:

(1) A, a trader, 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 saved the property without any intention of getting any reward.

Essential rules to claim payment under Sec.70 are as follows:

(i) The thing delivered or act done must be lawful: In case of an unlawful act, no payment can be recovered.

(ii) The act must have been done with an intention to claim the award:

Where the act was done without any intention of reward, no payment can be claimed.

Examples:

(1) In the case of Upendra v. Naba, a tank was owned jointly by the two owners. The Corporation ordered the filling up of the tank. One of the co-owners filled up the tank and sued the other for contribution. The Court held that the other co-owner was liable to pay the contribution as the other party filled up the tank with the intention to recover the contribution.

(2) A saved B’s son from drowning. A cannot claim the reward as the act was done gratuitously, i.e., without any intention of reward.

(iii) The other party for whom the act was done or thing delivered must have enjoyed the benefit:

The act must not have been done against the will of the other party.

Example:

Certain villages were irrigated by a tank repaired by the Government. The Government repaired the tank with the intention of recovering the cost of its repairs. The Court held that since the zamindars enjoyed the benefit of an act done lawfully and non-gratuitously, the beneficiaries, i.e., the zamindars were liable to pay. [Damodar Mudaliar v. Secretary of State for India].

4. This section does not apply to persons who are incompetent to contract: For example, minors etc.

5. Responsibility of finder of goods (Sec.71):

A person who finds goods belonging to another and takes them into his possession, is liable as a bailee. As a bailee, he is under an obligation to take reasonable care of the goods found, as a man of ordinary prudence would, under similar circumstances, take of his own goods. He must make reasonable efforts to trace the real owner. For example, if the amount is substantial, he may give a public notice in a newspaper or if the address card is there in a purse found, he must contact the owner at the address.

In case he does not make reasonable efforts to trace the real owner, he will be liable for wrongful conversion of the property. However, until and unless the real owner is found, he remains the owner of the goods against the whole world.

Example:

A finds a purse in B’s shop. Until the true owner of the purse is found. A is the owner of the purse even though the purse was found in B’s shop. However, A must take reasonable care of the purse until the true owner if found. He must also take reasonable steps to trace the real owner. However, A need not go, say, on fast into death until the real owner is found.

6. Liability of a person to whom money is paid, or thing delivered by mistake or under coercion (Sec. 72):

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

Examples:

(a) A and B jointly borrow 100 rupees from C. A returns 100 rupees to C. B, who does not know that A had already paid the whole amount also pays 100 rupees to C. C is bound to return the amount paid by B.

(b) A railway company refused to deliver up certain goods to the consignee, except upon the payment of an illegal charge for carriage. The consignee paid the sum charged in order to obtain the goods. He is entitled to recover so much of the charges as was illegally excessive.

Essentials of a claim on the basis of quantum merit :

(i) The party doing the work must have been prevented to perform the contract either by the other party by impossibility or illegality and not on his own volition (desire).

Example:

A engaged B to write a book to be published by instalments in a weekly magazine. The magazine had to be abandoned after a few issues. Held, B could ask for remuneration for the work done on the basis of quantum merit. [Planche v. Colburn]

(ii) The contract must be divisible: If the contract is not divisible the claim on the basis of quantum merit will not arise. Examples: .

(1) A mate was engaged for a complete voyage against a lump sum payment of 30. The mate died before the voyage was completed. Held, his window could not claim on the basis of quantum merit as the voyage was not completed and the contract was not divisible. [Cutter v. Powell],

(2) A agreed to construct four houses for B. After completing two houses, B asks A to stop construction. B must pay for the work already done, i.e., for the two houses.

The cases in which a claim on the basis of quantum merit arises :

1. Where an agreement is discovered to be void or becomes void, the party who has taken any benefit under the agreement/contract must restore it or repay it (Sec.65).

Example:

A agreed to purchase B’s cow and paid an advance at Rs. 100 to B later on. It was discovered that cow was dead at the time of the contract. B must return the sum of Rs 100 to A.

2. When something is done or delivered without an intention to do so gratuitously (Sec 70):

3. Where one party to the contract is prevented from performing the contract by the other party or by impossibility or illegality.

Example:

Printing of a book had to be abandoned as it contained libellous matter. The plaintiff was held entitled to recover on the basis of quantum merit. [Clay v. Yates]