QUASI CONTRACTS

 QUASI CONTRACTS OR CERTAIN RELATIONS RESEMBLING THOSE CREATED BY CONTRACT

Chapter V (Sections 68-72) of the Indian Contract Act, 1872 deals with "certain relations resembling those created by contract". It incorporates those obligations which are known as "Quasi Contracts" under English law. In various situations mentioned in that Chapter, 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 the 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. If A gets unjust enrichment at the cost of B, A has an obligation to compensate B for the same. For instance, 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.¹ In an action for unjust enrichment, the following essentials have to be proved

1. The defendant has been "enriched" by the receipt of a "benefit".

2. The enrichment is "at the expense of the plaintiff".

An action for a quasi-contract resembles an 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 contract (Section 68).

2. Reimbursement of money paid, due by another (Section 69).

3. Obligation of person enjoying benefit of non-gratuitous act (Section 70).

4. Responsibility of finder of goods (Section 71).

5. Liability of a person getting benefit under mistake or coercion (Section 72).

1. Claim for necessaries supplied to a person incompetent to contract

Where one person supplies necessaries suited to the condition in life of a person, who is incompetent to contract (for example, minor or lunatic), or to anyone whom such incompetent person is legally bound to support (for example, to a lunatic's wife or children), the person furnishing such supplies is entitled to a reimbursement from the property of such incompetent person.

Section 68 contains the following provisions in this regard:

"68. Claim for necessaries supplied to person incapable of contracting, or on his account. If a person, incapable of entering a contract, or anyone 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.

(b) A supplies 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.

"Capacity to Contract" that an agreement by a minor, or any person incompetent to contract is void ab initio. No action under a contract can be brought against a person for a claim for necessaries supplied to such incompetent person or his dependants. The claim cannot be enforced against such incompetent person, but reimbursement can be claimed only from the property of such a person. This provision has already been discussed in some detail while discussing the position of a minor.

 

2. Reimbursement of money paid, due by another

Section 69 contains the following provision in this regard:

"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 lands 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 annulment of B's lease. B, to prevent the sale and the consequent annulment of his own lease, pays to the Government the sum due from A. A is to make good to B the amount so paid."

For the application of this Section, the following two essentials are to be there:

(1) One person is interested in the payment of money, and therefore, he pays it, while,

(2) another person is bound by law to pay the same, but he fails to pay. The person so making the payment is entitled to be reimbursed by the person who was bound to pay.

 

(1)   One person is interested in the payment of money

The general purport of the Section is "to afford to a person who pays in furtherance of some existing interest an indemnity in respect of the payment against any other person who, rather than he, could have been made liable at law to make the payment."

 

 

Section 69 has been explained by an illustration, according to which if a landlord is in arrears of some land revenue to the Government, and the tenant, in order to avoid the sale of that land by the Government and consequential cancellation of the lease in favour of the tenant, makes the payment of the land revenue, he is entitled to recover the money so paid, from the landlord. The landlord was bound to pay the land revenue, and the tenant has an interest in making the payment, because otherwise there is a fear of his lease being cancelled, and therefore, the tenant can make a claim under Section 69. Similarly, if A contracts to sell some property to B, and 8 makes the sub-sale of the same property to C If certain municipal taxes have not been paid by A because of which the property is threatened to be sold off, C may pay those taxes. Once C makes the payment and the property has been saved from forced sale, B and C can join together to recover this amount from A The plaintiff's interest in making the payment is necessary. One person making voluntary payment of another person's debt, without having any interest in the payment, cannot seek reimbursement from the other

 

(2)   Another person should be bound by law to pay

It has been noted above that for this Section to be applicable, the plaintiff should have an interest in the payment, and the defendant should be bound by law to pay the same. The provision. is based on the principle that the plaintiff, having discharged the defendant's debt, is entitled to be reimbursed by him. If the plaintiff is not merely interested but he himself is bound to pay and also pays, he cannot have an action against the defendant. In Port Trust, Madras v. Bombay Company, an employee of the Port Trust was injured when on duty, and the plaintiffs as his employers paid him compensation amounting to Rs. 3,360 under the Workmen's Compensation Act, 1923. After making this payment to the workmen, the plaintiffs brought an action against the defendant, due to whose negligence the said workman had been injured. It may be noted that the basis of the liability of the defendant could possibly be under the law of torts for negligence towards the workman. The plaintiff's claim was dismissed and he was held not entitled to be reimbursed by the defendant under Section 69 for, the following reasons:

(i) The plaintiff was not merely interested in the payment as required by Section 69, he was rather himself bound by law to pay as the Statute (Workmen's Compensation Act, 1923) cast an inescapable liability on him to make this payment.

(ii) When the plaintiff made this payment, the defendant was not bound by law to pay as the defendant's liability to pay under the law of torts had not yet been determined.

"This payment, it cannot be said, is an amount which at the time of the payment the defendant was bound by law to pay. It may be that the defendant may be made liable in tort. He may be liable to the plaintiff or may be liable to the injured workman or he may not be liable at all. The liability had yet to be determined and ascertained."

 

3. Obligation of person enjoying benefit of non-gratuitous act

According to 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."

 

For the application of this Section, the following conditions are to be satisfied:

(1) A person should lawfully do something for another person, or should deliver something to him;

(2) The person making the payment or delivering the thing must not do so gratuitously, ie., he should expect payment for the same; and

(3) The other person should enjoy the benefit of this payment or the delivery of the thing. When all the above conditions are satisfied, the person receiving the benefit becomes bound to pay compensation to the person conferring the benefit.

(1) Doing of something or delivering anything to another person When a person does something for another person or delivers anything to him not intending to do so gratuitously, he is entitled to claim compensation for the same from such other person. Thus, if A, a tradesman, leaves goods at B's house by mistake and B treats the goods as his own, B is bound to pay A for them.'

Whether, after doing the work of rendering the services, the plaintiff is entitled to recover from the defendant any remuneration for the act or services, would depend on the plaintiff's intention at the time of doing the work. If he intended to act gratuitously, he cannot recover anything. Otherwise, compensation for the work done can be claimed. In the above stated case, when the Government had repaired the tank, there was no intention to do the act gratuitously. Even though the repairs of the tank were done by the Government for its own benefit also, it could recover compensation from the defendants for the benefit conferred upon them.

It must be doing of something positive

When there is nothing positive done by the plaintiff but he merely refrains from doing something, that is not sufficient to entitle him to make a claim under Section 70. In Kirorilal v. State of M.P., a lease was executed by the Mining Engineer of the State of Rajasthan for extraction of sand from a certain area in favour of the The said officer not being competent to execute the lease,

No intention to do the act gratuitously When the person doing the act does not intend to do it gratuitously but expects payment for the same on doing such act, he can ask for compensation under Section 70.

If a tenant of a property makes improvements and additions in the property and the landlord accepts the same, the presumption is that the tenant did not intend to do so gratuitously and he can recover compensation for the same from the landlord. Similarly, when a person gives some advance in respect of an agreement which is subsequently discovered to be void, he can recover back the amount not only under Section 65, which specifically deals with such a situation, but he can also claim back the advance under Section 70, because the advance payment was not intended to be gratuitous.2

Enjoyment of benefit by the defendant is necessary

For an action under Section 70, one of the essentials which has got to be proved is that the defendant enjoyed the benefit of the work done or the thing delivered to him by the plaintiff. The voluntary acceptance of the benefit of the work done or the thing delivered is the foundation of the claim under Section 70. If a person accepts the benefit of the work done, it can raise a presumption that the work was not intended to be done gratuitously.

To make a person liable for enjoying the benefit, it has to be proved that the defendant had a choice of accepting or rejecting the benefit he preferred to accept the same. In Shankarlal v. Kanneilal,' a suit for recovery of arrears of rent was filed against A and B, who had been partners in a firm. The said suit was decreed against A alone and was dismissed against B. A then filed a suit against B for the reimbursement of the amount of Rs. 420/- contending that B was in possession of the premises, and therefore he was liable to pay the rent. It was held that since the suit against B had been dismissed, he was under no obligation to pay anything. Moreover, there was no occasion for him to reject the thing done because he did not come in the picture at all. Therefore, the provisions of Section 70 were not attracted in this case.

Unjust benefit to the defendant necessary

Section 70 is founded on the principle that one should not gain unjust enrichment at the cost of the other. If there is no unjust gain obtained in any transaction, Section 70 has no application. In C.I. Abraham v. K.A. Cheriyan, A purchased some property for B, who was residing abroad, and collected the rents on behalf of B to be deposited in B's account but made a delay in the deposit of the rent in B's account. Thereafter, A claimed remuneration from B for his services in the form of purchasing property for B and collecting the rents on his behalf. It was held that there was nothing to prove that A rendered the services not intending to do gratuitously. Moreover, the fact that in this case B had gained no advantage at the cost of A, rather A had gained advantage by utilizing the amount of the rent collected until the same had been deposited in B's account, A was not entitled to claim any amount under Section 70.

 

4. Responsibility of finder of goods

Section 71 contemplates still another quasi-contractual situation, i.e., a person is a finder of goods. A "finder of goods" is "a person who finds goods belonging to another and takes the goods into his custody." Although as between the finder and the owner of the goods, there is no contract, yet the following responsibility has been fixed by Section 71, on the finder of goods. The Section reads as follows:

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

The position of the finder of goods is similar to that of a bailee. For instance, like a bailee of goods, the finder is bound to take as much care of the goods as a man of ordinary prudence would, under similar circumstances, take of his own goods of the same bulk, quality and value as the goods found by him. Similarly, he should not mix the goods found by him with his own goods. He, like a bailee, is bound to return the goods to the true owner, if he can, after a reasonable search be found. If, because of his default, the goods are not returned to the true owner, or there is any loss, destruction or deterioration of the goods, the finder must compensate the owner for the same.

The finder of goods has, however, been authorized to sell the goods found by him. Section 169, which confers such an authority, is as follows:

"169. When finder of thing commonly on sale may sell it. When a thing which is commonly the subject of sale is lost; if the owner cannot with reasonable diligence be found or if he refuses, upon demand, to pay the lawful charges of the finder, the finder may sell it- (i) When the thing is in danger of perishing or of losing the (ii) When the lawful charges of the finder, in respect of the thing found, amount to two-thirds of its value." Under Section 169, the finder of the goods has the power to sell them when-

(1) the owner of the goods cannot with reasonable diligence be found, or if he refuses, upon demand, to pay the lawful charges of the finder, and

(2) either the thing found is in danger of perishing or of losing the greater part of its value, or, in case the goods of perishable nature, but the lawful charges of the finder, in respect of the thing found, amount to two-thirds of its value If the situation is not covered by Section 169 and the finder sells the goods, he can be made liable for conversion.

 

5. Liability of a person getting benefit under mistake or coercion

Unjust benefit under mistake Section 72 covers a situation where money has been paid, or anything delivered, by one person to another either by mistake or under coercion.

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

The Section has been explained by the following 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 illegally excessive.