Certain Relations Resembling Those Created By Contract (under Section 68-

72 of The Indian Contract Act, 1872 )

Submitted by

Sivaganga.S.R

B.A. L.L.B(1ST Year)

Submitted to

Ms. Preeti

SRM University, Sonepat, Haryana,Delhi - NCR

November 2017
 Table Of Contents

SL.NO CONTENTS PAGES

1. INTRODUCTION 1
2 Contracts 1-2
3. What is a 'Quasi Contract'? 2
4. BREAKING DOWN 'Quasi Contract' 2
5. History of Quasi Contract 2- 3
6. The Indian Contract Act, 1872 3
7. Section 68 4
8. Section 69 4
9. Section 70 5
10. Section 71 5
11. Section 72 5
12. 6
Similarities between Quasi Contracts and Contracts
13. 6-8
Distinction between Quasi Contracts and Contracts
14. Cases 9-10
15. Conclusion 11
16. Bibliography 11

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 Table Of Cases(according to alphabetical orders)

SL NO CASES PAGES
1. Brook’s Wharf v. Goodman Brothers(1937) 9
2. Indu Mehta v. State of U.P, AIR 1987 10
3. Kuppuswamy Chettiar Vs. A.S.P.A. 9
Arumugam Chettiar and anr. - Court Judgment:
4. Mahabir Kishore v. State Of Madhya Pradesh 9

II
 Table Of Abbreviation

SL.NO Abbreviation
1. AIR ALL INDIA REPORTER
2. Chap. CHAPTER
3. CPC CRIMINAL PROCEDURE CODE
4. Sec. SECTION
5. U.P UTTAR PRADESH

III
 Introduction

According to various worldwide social anthropology surveys conducted till now suggest that
whenever two or more people meet together, there are chance of 75% of making an agreement.
So here in this situation we need a contract to complete the dealings. Now questions arises like
Why you need a contract? You want to sign a contract?! Why on earth do we need to sign a
contract? Can’t we just do this on a handshake? Can’t I trust you? Well before these question get
answered we should know What is contract?
Contracts

According to The Indian Contract Act, 1872 Sec 2(h) “an agreement enforceable by law is a
contract”. In other words, an agreement between two or more parties creating obligations that is
enforceable or otherwise recognizable at law. Contracts are promises that the law will enforce. The
law provides remedies if a promise is breached or recognizes the performance of a promise as a
duty. Contracts arise when a duty does or may come into existence, because of a promise made by
one of the parties. To be legally binding as a contract, a promise must be exchanged for adequate
consideration. Adequate consideration is a benefit or detriment which a party receives which
reasonably and fairly induces them to make the promise/contract. For example, promises that are
purely gifts are not considered enforceable because the personal satisfaction the grantor of the
promise may receive from the act of giving is normally not considered adequate consideration.
Certain promises that are not considered contracts may, in limited circumstances, be enforced if
one party has relied to his detriment on the assurances of the other party. A contract means an
agreement which is enforceable by law. An agreement consists of reciprocal promises between the
two parties. In case of contract, both the parties are legally bound by the promise made by him. A
contract to perform a promise could arise in these ways: by agreement and contract, standard form
contracts, and promissory estoppel.

Following reasons why two parties in an agreement should be in contract:

1. Contracts provide a description of responsibilities. Rather than suffer through the confusion
of wondering what each party’s responsibilities are, you’re better to have everything in writing.
This will help avoid confusion or disagreement.
2. Contracts bind parties to their duties. It is incredibly disruptive if one party attempts to back
out of an agreement. A contract will bind the parties to the previously defined description of
duties eliminating this problem.
3. Contracts can establish a time frame for duties. If you need work performed and performed
within a certain time frame a contract binds the party to that time frame. As a consultant, you
might want to require the other party to provide adequate and timely access to key personnel,
for example.
4. Contracts can secure payment. No one likes to be stiffed for work performed and a binding
contract provides a written legal document establishing an agreement to be paid for services
rendered.
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5. Contracts provide recourse when the relationship falters. If the relationship between the
contracted parties deteriorates, a contract outlines the previously agreed upon steps required for
dissolving the relationship without punitive measures.

What is a 'Quasi Contract'?

A quasi contract is an agreement between two parties without previous obligations to one another
that has been created and legally recognized by the court system. under a quasi-contract, neither
involved party is expected to create such an agreement; this contract is arranged and imposed by
a judge to correct a circumstance in which one party acquires something at the expense of the
other party.

There are many situations in which law as well as justice requires that a certain person be
required to confirm an obligation, although he has not broken any contract nor committed any
tort. For example for Quasi Contract would be worthy of Quoting for the better understanding of
Quasi Contract, if a person in whose home certain goods have been left by mistake is bound to
restore them. This shows that a person cannot entertain unjust benefits at the cost of some other
person. Such kind of obligations are generally described, for the want of better or
more appropriate name, as Quasi Contractual Obligations. This would be better to explain it up
that Quasi contract consists of the Contractual Obligation which is entered upon not because the
parties has consented to it but because law does not allow a person to have unjustified benefit at
the cost of other party. These are not contracts but these fictional agreements arise to ensure
equity as it would be unfair if a party gets undue advantage at the cost of other. The liability
exists in quasi contracts on the basis of the doctrine of unjust enrichment. Take for an example a
person in whose house certain goods have been left incidentally, so that person is bound to
restore them. There will be an obligation on the house owner to restore the goods safely that is
imposed by law rather than any agreement between the parties. Such type of contractual
obligations are termed as quasi contractual obligations.

BREAKING DOWN 'Quasi Contract'

For example, consider a pizza that is delivered to the wrong address. The pizza has already been
paid for. If the individual does not correct the delivery man and instead keeps the pizza, the court
system could issue a quasi contract that would require the individual to pay back the amount of
the pizza to the party that paid for the pizza. The contract is used to prevent any party from
benefiting from the situation at the other party's expense; the restitution required under the
contract is to make the situation fair.
The History of Quasi Contracts

Under common law jurisdictions, quasi contracts can be followed back to the Middle Ages under
a form of action known as indebitatus assumpsit. This law saw that the plaintiff in a case
received a sum of money from the defendant, as dictated by the courts, as if the defendant had

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agreed to pay the plaintiff. Indebitatus assumpsit was the courts' way to make one party pay the

other as if a contract or agreement already existed between the two parties – the defendant’s
promise or agreement to be bound by the contract requiring reparations was implied by law. At
the very beginning of the quasi contract's use, it was typically imposed in order to enforce
restitution obligations.

The Indian Contract Act, 1872

According to Chap.V(Sec.68-72) of the Indian Contract 1872 deals with “certain relations
resembling those created by contract”. It incorporates those obligations which are known as
“Quasi Contract” under English law. In various situations mentioned in the chap., a person is
obliged to compensate another although the basis of this obligation is neither a contract between
the parties, nor any tort on the part of person who is bound to compensate. The basis of the
obligation is that no one should have unjust benefit at the cost of the other.
Requirements

Certain aspects must be in place for a judge to issue a quasi contract. One party – the plaintiff –
must have given a tangible item or a service to another party – the defendant – with an
expectation/implication that payment would be given. The defendant must have accepted or
acknowledged receipt of the valuable thing but did not make any effort or offer to pay. Then, the
plaintiff must express why it would be unjust for the defendant to receive the thing of value
without paying for it, so the defendant received unjust enrichment.

Considering the example above, the individual that ordered the pizza and paid for it would have
every right to demand payment from the individual who actually received the pizza; the first
individual is the plaintiff, the latter is the defendant. A quasi contract, also known as an implied
contract, would be handed down, requiring the defendant to pay restitution to the plaintiff. The
restitution – known as quantum meruit – is calculated by the amount or the extent to which the
defendant was unjustly enriched.

An action for quasi-contract resembles a contractual action in so far as such an action is against a
certain person or certain persons, who have got the unjust benefit. Such an action, it may be
further noted, is for a liquidated sum of money.

The Indian Contract Act deals with the following quasi-contractual obligations :

1. Claim for necessaries supplied to a person incompetent to contract(Sec.68).

2. Reimbursement of money paid, due by another(Sec.69).
3. Obligations of person enjoying benefit of non-gratuitous act(Sec.70).
4. Responsibility of finder of goods(Sec.71)
5. Liability of a person getting benefit under mistake or coercion(Sec72)
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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.
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. (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. (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
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. —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."
For the application of this Sec., the following two essentials are to be there:
1) One person is interested in the payment of money, and therefore, he pays it, while(refer
Brook’s Wharf v. Goodman Brothers)
2) Another person is bound by law to pay the same, but he fails to pay.(refer Port Trust,
Madras v. Bombay Company, AIR 1967)

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Section 70

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 thing so done or delivered.1 —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.

Illustration
(a) 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. (a) 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.
(b) 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. (b) 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.
For the application of this Sec., the following conditions are to be satisfied :
1) A person should lawfully do something for another person, or should deliver something
to him(refer Indu Mehta v. State of U.P)
2) The person making the payment or delivering the thing must not do so gratuitously, ie, he
should expect payment for the same; and(refer Kirorilal v. State of M.P.)
3) The other person should enjoy the benefit of this payment or the delivery of the thing.

Section 71

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.
Section 72
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. (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."
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(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. (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."

Similarities between Quasi Contracts and Contracts

The result of contract and quasi contract are similar to that of contracts. So far as the claim for
damages are concerned they are very similar to that of contracts because section 73 of the Indian
Contract Act, 1872 provides remedies for the breach of quasi contracts as provided for the breach
of express contracts in various sections of the Indian Contract Act, 1872. Remedies are available
under quasi contract under Indian contract act, 1872.

Distinction between Quasi Contracts and Contracts

A “quasi” or constructive contract is an implication of law. An “implied” contract is an implication

of fact. In the former the contract is a mere fiction, imposed in order to adapt the case to a given
remedy. In the latter, the contract is a fact legitimately inferred. In one the intention is disregarded;
in the other, it is ascertained and enforced. In one, the duty defines the contract; in the other, the
contract defines the duty. Any contract has two essential features i.e. agreement and obligation.
Agreement arises when a party puts forwards a proposal and when that proposal is accepted by the
other party. Obligation comes into picture as law imposes it over the parties but is linked to the
agreement between the parties. Therefore, a contract is a legally enforceable agreement. Basically
contracts are express or implied by law. The former comes into picture by the conduct or words or
negotiateions between the parties. The contract that implied by law is not a real contract. It would
be unfair to term it a contract. It arises when law irrespective of agreement aims at meeting the
ends of justice. A distinction is set forth in ‘Keener’ on these types of contracts.

It has been observed that these contracts and quasi contracts are the matter of practical importance.
The concept revolves around the agreement and obligations between parties. The quasi contracts
differ from contracts that are generally express as they contains each terms in words while in the
latter, the terms come into existence by the conduct of the parties. In one case it appears to be a
fiction and in the other appears to be a fact that is legitimately inferred. In one intention is discarded
and in the other intention is ascertained and enforced. In one duty defines the contract while on the
other hand contract defines the duty. Quasi contracts are not entered by implied words but are
operated on the basis of the conduct of the parties. It seems to be unfair that the law implying a
promise on someone whose declarations disprove any intention but still this practice is in
functioning. The express contracts are approved by parties as a matter of law both sharing equal
interests with equal consequences though the conditions are stated expressly while in the case of
quasi contracts the law imposes obligations taking into view the conduct of the parties in order to
prevent undue advantage to one party at the cost of another. These types of contracts are those
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which are referred to distinguish in practice form obligation quasi ex contractu and to pay for

benefits conferred. If the situation arises where a mistake is not to the doer when the benefit is
incurred, the obligation is quasi contractual. The concept of such types of contracts has been in
existence upon the principles of honesty, justice and fairness. Basically the most fundamental
principle to make quasi contract come in existence is upon the principle of justice to ensure no one
ought to have unjustly enrich himself at the expense of another.

CONTRACTS QUASI CONTRACTS

• A contract is a contract between two • A quasi-contract is not a real contract. Quasi contracts are also
parties. In contract, always there is an known as “constructive contracts” or “certain relations resembling
agreement between the parties. those created by contracts”.

• In contract, always there is an agreement
between the parties.
• In contract, the parties must give their
consent to it.
• Where as in quasi-contract, there is no agreement between the
parties.
• In quasi-contract, the parties do not consent.
• In quasi-contract, the liability exists independent of the agreement
and rests upon equity, justice and good conscience.

• It is imposed by law. It is not created by the operation of the

contract.
• In contract, the liability exists between
the parties by the terms of the parties.

• It is right in personam. I.e. strictly available against a person

• It is created by the operation of the and is not available against the entire world.
contract.

• Salmond defines quasi contracts: “there are certain obligations

• It is right in rem, and also right in which are not in truth contractual in the sense of resting on agreement, but
personam.
which the law treats as if they were”.
 • 2(h) of the Indian contract act, 1872,
defines contract: “an agreement • Lord Mansfield explained that law as well as justice should try
enforceable by law is a contract”. to prevent “unjust enrichment”. I.e. enrichment of one person at
the cost of another. He explains: “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, i.e. to
• The word “contract” is divided from the prevent a man from retaining the money of, or some benefit
Latin “contractum” which gives derived from, another which it is against conscience that he
meaning “drawn together” or “consensus should keep. Such remedies in contract or tort, and are now
ad idem (identity of minds). Thus the recognized to fall within a third category of the common law
meaning of “contract” is a drawing which has been termed as quasi-contract or restitution”.
together of two or more minds to form a
common intention giving rise to an
agreement”.
Essentials:
Essentials:
• It is imposed by law. It is not created by contract;
• It is a right in personam;
• Free consent;
• The person who incurs expenses is entitled to receive money
• The parties must be competent;
(unjust enrichment); and
• There must be lawful consideration and
lawful object; • It is raised by a legal fiction.
• The agreement must not expressly be
declared to be void; and
• If the law in force requires, it must be
registered.

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 CASES
1) Mahabir Kishore v. State Of Madhya Pradesh:the requirements of the principle of unjust
enrichment were laid down by the Hon’ble Supreme Court as follows:

• The defendant has been ‘enriched’ by the receipt of a benefit.

• This enrichment is at the expense of the plaintiff
• And the retention of unjust of the enrichment is unjust.

2) Kuppuswamy Chettiar Vs. A.S.P.A. Arumugam Chettiar and anr. - Court Judgment:

….further, it questioned whether deed could enlarge interest of releasee - the court ruled that the
release deed clearly showed an intention to transfer title - further, the deed was in favour of a
person having no interest in the property and it could not take effect as an enlargement of an
existing estate - moreover, a deed of release could transfer title to one having no title before the
transfer. - indian penal code, 1890 section 300: [dr.arijit pasayat, v.s.sirpurkar & asok kumar
ganguly,jj] murder deceased alleged to have been killed by his wife and son - eye-witnesses who
were brother and friend of deceased, attempted to protect accused persons. however, there was no
credible evidence to show involvement of accused in concerned crime held, acquittal of accused
is not liable to be..........release was vitiated by misrepresentation, and if, not, whether it operated
as a conveyance of the suit properties in favour of the respondents. by a will dated august 9, 1931,
their grandfather ponnuswami bequeathed the immovable properties to his paternal uncle's
daughter, kannammal. in january, 1952, the respondents instituted o.s. no. 24 of 1953 against
several persons including kannammal challenging inter alia the validity of the bequest made by
ponnuswami. on february 1, 1952, kannammal died leaving as her heir the appellant who was her
husband's brother's son. on february 25, 1952, the appellant executed a deed, ex. b-1, in favour of
the respondents releasing the suit properties including certain outstanding due from third parties.
on february 26, 1952, the deed was registered.

3)Brook’s Wharf v. Goodman Brothers(1937): The defendants warehoused certain goods which
they had imported from Russia, with the plaintiffs. The goods were stolen. Under the law the
customs duty on the goods could be recovered either from the owners of the goods, or from the
warehouseman. The warehouseman, ie, the plaintiffs were called upon to pay the customs duty the
owners of the goods, ie, the defendants were bound by law to pay. The plaintiffs claimed the
amount of the duty paid by them from the defendants. It was held that they were entitled to recover
the same.

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4) Indu Mehta v. State of U.P, AIR 1987:In this case, Miss Indu Mehta, an Advocate,
practicing at the District Court Kanpur, was appointed as Asst. District Government
Council(Criminal), in pursuance whereof she rendered her services. The appointment was,
however found to be void in view of Sec.24(2), CPC,1973.It was held that even though the said
appointment was void, the State had enjoyed the benefit of the services rendered by Miss. Mehta,
the Government was not entitled to recover back the fees already paid to her for the services.

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Conclusion

It is proved by the research that contracts and quasi contracts are far different. They are not
contracts but are obligations that the law imposes upon someone to prevent undue advantage to
one person at the cost of another. The Indian Contract Act, 1872 covers these types of obligations
under the Chapter V under the title ‘OF CERTAIN RELATIONS RESEMBLING THOSE
CREATED BY CONTRACT’ but the act does not include the term ‘quasi contract’. It could be
because of the reasons that the act also wants to tell that these type of obligations are far different
from real contracts and they must not be called quasi contracts. It is the law that compels parties
who get unduly advantaged to compensate the other party on the principle of equitable justice. The
foundation of quasi contracts is based on the principles of Equity, Justice and Good
Conscience, which requires that nobody shall benefit himself unjustly, at the cost of others. This
is known as the Principle of Unjust Enrichment. The basis of quasi contract is that technicality of
contract cannot override the requirements of justice. When something has been done for the benefit
of another person without the waiting for his formal assent as also for the completion of other
formalities, it is expected that the person receiving the benefit must compensate the other party for
the trouble and expenses incurred. The contract and quasi contract can be distinguished by focusing
on the concept of agreements and obligations by and on the parties respectively. The unjust
principle came from the old maxim of Roman law ‘Nemo debet locupletari ex aliena jactura’ that
means no man must grow rich because of one’s personal loss. The doctrine of quasi contracts has
been an essential part and aspect of the Indian Contract Act, 1872 in dealing with such obligations
which causes loss to one party over undue benefit to the other party.

Bibliography
1) Universal Bare Act
2) Contract – I by Dr. R.K.Bangia
3) Lawctopus
4) Investopedia
5) Indian Kanoon
6) Consultant journals
7) Legal services of UK
8) Google Scholar

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