Name of College - Jamnalal Bajaj Institute of Management Studies

Course Name - MHRDM

Name – Anish Hanumantha Gawda
Roll Number – 21-H-05
Subject – Business Law

Assignment: Part 1

Quasi Contract

What Is a Quasi Contract?

A quasi contract is a retroactive arrangement between two parties who have no previous obligations to one
another. It is created by a judge to correct a circumstance in which one party acquires something at the
expense of the other.

The contract aims to prevent one party from unfairly benefiting from the situation at the other party's
expense. These arrangements may be imposed when goods or services are accepted, though not requested,
by a party. The acceptance then creates an expectation of payment.

Understanding Quasi Contracts

Quasi contracts outline the obligation of one party to another when the latter is in possession of the original
party's property. These parties may not necessarily have had a prior agreement with one another. The
agreement is imposed by law through a judge as a remedy when Person A owes something to Person B
because they come into possession of Person A's property indirectly or by mistake. The contract becomes
enforceable if Person B decides to keep the item in question without paying for it.

Because the agreement is constructed in a court of law, it is legally enforceable, so neither party has to agree
to it. The purpose of the quasi contract is to render a fair outcome in a situation where one party has an
advantage over another. The defendant—the party who acquired the property—must pay restitution to the
plaintiff who is the wronged party to cover the value of the item.

A quasi contract is also known as an implied contract. It would be handed down ordering the defendant to pay
restitution to the plaintiff. The restitution, known in Latin as quantum meruit, or the amount earned, is
calculated according to the amount or extent to which the defendant was unjustly enriched.

These contracts are also referred to as constructive contracts as they are created when there is no existing
contract between the two parties involved. If there is an agreement already in place, though, a quasi
contract generally cannot be enforced.
History of Quasi Contract

The history of quasi-contract can be taken after back to the Middle Ages, under a home that was alluded to
back at that point as an indebitatus assumption. In that period, the law managed that a plaintiff would get a
whole of cash from the litigant, in a sum directed by the courts, as if the litigant had continuously concurred
to pay the offended party for his good or services.

Indebitatus assumption was a strategy utilized by the courts to form one party to pay another as if a contract
had been made between the two parties. The defendant’s understanding to be bound by a contract that
required recompense was inferred by the law. The early days within the history of quasi-contract saw such
contracts being utilized to uphold commitments related to compensation.

Features of a Quasi Contract

·        It is more often than not a right to the money and is for the most part (not continuously) to a liquidated
sum of money.
·        The right isn’t a result of an assertion but is forced by law.
·        The right isn’t accessible against everybody within the world but as it were against a particular
person(s).
·        Thus, it takes after a contractual right.
Sections 68 – 72 of the Indian Contract Act, 1872 there are five circumstances under which a Quasi-contract
comes to exist. Remember, there’s no real contract between the parties and the law forces the legally
binding risk due to the unconventional circumstances.
Section 68 – Necessaries Supplied to People Unfit of Contracting
In case an individual supply is necessarily suited to the condition in life of such a person, at that point he can
get repayment from the property of the unfit person. John could be lunatic.
Peter supplies John, with certain necessaries suited for his condition in life. In any case, John does not have
the money or sanity and fails to pay Peter. This is termed as a Quasi-contract and Peter is entitled to
repayment from John’s property.
 However, to set up his claim, Peter must demonstrate two things:
1.      John could be a lunatic
2.      The merchandise provided was fundamental for John at the time they were sold/ delivered.
Section 69 – Installment by an Interested Person If an individual pays the money on someone else’s behalf
which the other person is bound by law to pay, at that point he is entitled to reimbursement by the other
person.
Peter is a zamindar. He has leased his land at John, a farmer. However, Peter fails to pay the income due to
the government. After sending notices and not receiving the installment, the government releases notice for
the deal of the land (which is rented to John).
According to Revenue law, once the land is sold, John’s lease agreement is annulled. John does not want to
let go of the land since he has worked difficult on the land and it has started yielding good produce. In order
to avoid the deal, John pays the government the amount due to Peter. In this situation, Peter is committed to
reimburse the said amount to John.
Section 70 – Commitment of Individual enjoying the benefits of a Non-Gratuitous Act.
Imagine an individual legally doing something or conveying something to someone without the purposeful of
doing so needlessly and the other individual enjoying the benefits of the act done or goods delivered.
In such a case, the other individual is obligated to pay compensation for the act, or goods received. This
compensation can be in cash or the other person can, possibly, restore the thing done or delivered.
 However, the plaintiff must prove that:
1.       The act that’s done or thing delivered was lawful
2.       He did not do so gratuitously
3.       The other individual enjoyed the benefits
Section 71 – Duty of Discoverer of Goods
If an individual finds a product that belongs to somebody else and takes them into his custody, then he needs
to follow the following responsibilities:
·        Take care of the products as an individual of normal prudence
·        No right to appropriate the goods
·        Restore the merchandise to the owner (if found)
Peter possesses a flower shop. Olivia visits him to purchase a bouquet but forgets her handbag in the shop.
Tragically, there are no documents in the handbag to help find out her identity. Peter leaves the handbag on
the checkout counter assuming that she would return to take it. John, a partner at Peter’s shop, finds the
handbag lying on the counter and puts it in a drawer without informing Peter. He finished his shift and went
home. When Olivia comes looking for her purse, Peter can’t find it. He is liable for remuneration since he did
not take care of the purse which any prudent man would have done.
Section 72 – Money paid by Mistake or Under Coercion If an individual gets money or goods by mistake or
under impelling, at that point he is at risk to reimburse or return it.
Peter misjudges the terms of the lease and pays municipal tax incorrectly.
After he realized his botch, he approached the municipal authorities for reimbursement. He is entitled to be
repaid since he had paid the money by mistake.
Similarly, cash paid by restraint which includes abuse, extortion or any such implies, is recoverable.

Cases
In the case of Hari Smash Seth Khandsari v Commissioner of Sales Tax
The Court also agreed to the truth that, although the term has been avoided in this chapter, this chapter is
about the teaching of quasi-contracts. The concept of quasi-contract was first discussed within the case
of Moses v MacFarlane. In this case, Ruler Mansfield stated that such commitment was based upon the law as
well as justice to anticipate undue advantage to one individual at the cost of others.
In the case of Spolka v Fairbairn Lawson Combe Barbour Ltd
The Court expressed that the obligations which emerge in such situations where one individual is enhanced at
the cost of another- the commitment does not drop simply either beneath torts law or contract law. They
drop beneath the concept of “restitution or quasi-contracts.”
To summarize, to bring out the concept of Quasi-contracts, three conditions are required to be satisfied as
expressed by the Court within the legal proclamation of Mahabir Kishore & others v. the State of MP:
·        There needs to be an unreasonable improvement due to the receipt of a benefit.
·        The enhancement ought to take out at the cost of a few other parties.
·        The maintenance of such improvement is unjust.

Similarities between Contract and Quasi Contract

The result of the contract and quasi-contract is similar.
So far as the claim for damages is concerned, they are very comparable to that of contracts since Section 73
of the Indian Contract Act, 1872 gives remedies for the breach of quasi-contracts as given for the breach of
express contracts in different areas of the Indian Contract Act, 1872. Remedies are accessible under quasi-
contract beneath the Indian contract act, 1872.

Difference between Contract and Quasi Contract

A quasi-contract can be considered as a valuable contract or a suggestion of law. It is a fictitious contract,
pointed towards giving a cure to the distressed party, which isn’t the case in an express contract.
In the case of quasi-contracts, the purposeful of the parties isn’t considered, but within the case of an
express contract, the purposeful of the parties is exceptionally vital as, without the intention to enter into an
assertion, there would be no contract at all. In the case of a quasi-contract, the obligation of the parties
characterizes the contract, which shapes the terms of the contract. But on the other hand, within the case of
quasi-contract, the obligations are characterized due to the formation of a contract.
In words of Keener, A quasi-contract is one which has been suggested by the law, and it denotes the nature of
evidence through which the wronged party can claim compensation. Though the party who has been
enhanced would not set out to expect any commitment, the law will force it.
In an express contract, both parties have broken even with the interests, but in the case of a quasi-contract,
the contract comes into being since the intrigue of one party is affected.

Conclusion
As stated above, a quasi-contract isn’t a contract within the pure sense.
It can be considered as an invented contract.
This moreover may be the reason why the statute does not say the term “quasi-contract” expressively, but
indirectly covers the concept to prevent out of line improvement.
Hence, the basis of a quasi-contract is very basic that a contract cannot supersede the requirement and sense
of justice. When something is done for a person or a thing is delivered to him without a needless deliberate,
he is bound to form a compensation or restore the aggrieved party to his past position.
 Free Consent
In order for a valid contract to persist, it is essential to ensure free consent of the parties. There is a concept
of consensus-ad-idem which implies that the parties entering into the contract must mean the same thing in
the same sense. The understanding about the terms of the contract between both the parties should be on
the same subject matter and footing. The entire structure of law of contract is based on the concept of
consent, which is placed on the highest pedestal during any agreement. In order to validate the formation of
a contract, the main ingredient would be the obtainment of genuine and free consent of the parties. Thus,
the mere acquisition of consent is not enough but the consent must be obtained in a free and voluntary
manner.
According to the Indian Contract Act, consent is said to be achieved in all situations except when it is caused
by coercion, undue influence, fraud, misrepresentation or mistake. These methods of obtaining consent
render the agreement voidable at the instance of the aggrieved party and can invalidate the contract.
However, if mistake was a part in obtaining consent, the agreement is said to be void. The main objective of
this aspect is to be fair to both the parties and ensure that the judgment of either of the party was not
clouded or influenced before entering into a contract. This doctrine helps in the promotion of individual
autonomy and freedom to contract.

Relevant legal provision(s)

Section 13 and 14 of the contract Act define consent and free consent respectively. Consent, under Section
13, is said to be achieved when two or more individuals agree upon the same thing in the same manner. The
elements that are said to vitiate consent are also given under the Indian Contract Act and are Coercion
(Section 15), Undue Influence (Section 16), Fraud (Section 17), Misrepresentation (Section 18) or Mistake
(Sections 20, 21 and 22).

 Coercion can be defined as the physical or mental force that is used upon a person to enter into a
contract against his will. The consent in such a situation is not free and there is usage of force or
threats to obtain consent. Section 15 of the Indian Contract Act defines coercion as committing or
threatening to commit any act forbidden by law in the IPC or unlawful detention or threaten to detain
any property or person with the aim of causing a person to enter into a contract. Coercion makes a
contract voidable at the instance of the aggrieved party. If any consideration is paid or goods are
delivered at such a time, it must be returned or delivered if the contract is void. The burden of proof
rests on the party who wants to avoid the contract and he must prove that the consent was not given
freely.

 Undue Influence refers to a situation wherein the relations between the two parties are such that one
party is in a position to dominate the other and thus, uses said position to influence the other party
and obtain an unfair advantage. This is given under Section 16 of the Act. This situation can occur if
the people are in a fiduciary or superior – subordinate relationship. This can also occur when a
contract is made with a person whose mental capacity is affected by age, illness or distress. However,
for an agreement to become voidable, it must be proved that the dominant party had the objective to
take advantage of the other party. The burden of proof, here, rests on the dominant party to prove
the absence of influence.

 Fraud, under Section 17, occurs when a person deceits another person by making false statements,
thereby compelling him to enter into contracts. This is done with the complete knowledge that the
statement is untrue or in a manner that is reckless without checking its validity and thus impairs free
consent. According to Section 17, there are certain instances where frauds occur which are suggesting
a fact that it is not true and there is no belief of it being true, the active concealment of fact, a
promise made without any intention of it being performed. It is essential that the aggravated party
suffer from some actual loss due to the fraud and has incurred damages. The false statement must be
a fact rather than an opinion to constitute a fraud.

 Misrepresentation, as given in Section 18 occurs when a party makes a statement that is false and
inaccurate. However, the misrepresentation is supposed to be innocent and non intentional and the
party making it must believe it to be true. There can be 3 ways in which misrepresentation occurs and
 it is that the person makes a positive assertion believing it to be true. However, the breach of duty
should lack the intent to deceive and the breach gives the person committing it an advantage by
misleading the other. The third way is when one party acts innocently and thus, causes the other party
to make any mistake with respect to the subject matter of the agreement. The burden of proof is
placed on the party claiming the occurrence of misrepresentation and this becomes voidable.

 Mistake occurs when there is a misunderstanding with respect to legal provisions when it comes to
obtaining consent. If it weren’t for the misunderstanding, the party would not have consented to enter
the agreement. There are 2 types of mistake namely mistake of law and mistake of fact. Mistake of
law occurs when a party has any misunderstanding with respect to any legal provision, and in most
cases the contract cannot be avoided as ignorantia juris non excusat (ignorance of law is no excuse)
prevails. However, if the parties have any confusion or misunderstanding with respect to the subject
matter or terms of contract, it is said to be mistake of fact. The agreement is valid if there is
misunderstanding on the part of one party.

Case laws

Chikkam Ammiraju v. Chikkam Seshama (1917) 32 MLJ 494

 This is a case involving coercion wherein the question before the Court was whether coercion could be
caused by a threat to commit suicide. In this case, a husband threatened to commit suicide and thus
induced his wife and son to execute a release deed in favor of his brother in respect if certain
properties that they claimed to be their own. It was held that a threat to commit suicide amounted to
coercion and the deed was voidable.

Wajid Khan v. Raja Ewaz Ali Khan, (1891) ILR 18 CAL 545

 In this case, an old and illiterate woman conferred a high monetary benefit onto her manager without
any valuable consideration and it was held that undue influence was applied. The burden of proof was
on the manager to show that it was a bonafide transaction and no undue influence was exercised.

Shri Krishan v. Kurukshetra University, 1976 AIR 376

 The plaintiff was a candidate for the LLB exam. The candidate was short of attendance and failed to
mention it in the admission form of the exam. Neither the head of the department not University
authorities bothered to conduct a check and discover the truth. The Court held that the candidate had
not committed any fraud and there was no power in the University to withdraw the candidature of the
candidate.

Long v. Lloyd, [1958] 1 WLR 753

 The defendant, in this case, sold his lorry to the plaintiff by making a representation which was false
that the lorry was in excellent condition. However, after buying it the plaintiff discovered serious
defects in the lorry and instead of rescinding the contract, accepted the defendants offer of half the
cost of repairs. Subsequently, the lorry broke completely and the plaintiff wanted to rescind the
contract however the court held that this right did not exist any more as the plaintiff had affirmed the
contract by accepting to share costs.
 Critical analysis

 The concept of free consent is a very important one in the law of contracts and provides the basis in
making contracts. However, it becomes hard to prove consent in cases and thus proper scrutiny is
required. It is essential that there be meeting of minds, i.e., both the parties must agree on the same
thing in the same manner. Only then will consent be fulfilled. In order for there to be informed
consent, it is essential to embody volition, information and comprehension. In order to be able to
exercise ones own free will, there must not be any undue influence or coercion. Coercion occurs when
a person threatens to do something to harm the other party or his property if consent is not given.

 Undue influence consists of the exercise of power or dominance from a person who is in a fiduciary
relationship with the other party or a person with authority. Another aspect of consent is the
requirement of information and to achieve this, it is pertinent that there is no fraud or
misrepresentation. Comprehension would occur when there is no mistake on the part of either of the
parties in understanding the terms of the agreement. Contracts are the most intricate part of any
transaction and must be handled delicately so. A contract is voidable when there is absence of free
will.

Conclusion

 The concept of consent is an integral part of any decision making process and is the basis for contract
making. However, in recent times it has become extremely hard to ascertain free consent. Thus, there
is a need to come up with means to find out whether consent has been given freely or not. People
tend to rely on the defenses if they are being charged for coercion, undue influence etc.

 The ways in which consent can be influenced are discussed and in cases of coercion, undue influence,
fraud and misrepresentation, the contract tends to be voidable at the option of the aggrieved party.
However, in case of mistake, the parties can only avoid the contract in situations where there exists a
bilateral mistake of the party with respect to the important facts of the agreement or if there is a
problem regarding knowledge of foreign law.

Contingent Contract 

Under section 31 of Indian Contract Act, 1872, Contingent contract is defined as 'contingent contract is a
contract to do or not to do something, if some event, collateral to such contract, does or does not happen.

Contingent Contracts in simple words means these are those contracts where a promise is conditional and
based on some happening and non-happening of some uncertain future event, the contract shall perform. The
contracts of insurance, guarantee, and insurance are some examples of contingent contracts.

For example, Raj contracts to pay Shyam Rs 50,000 if Shyam's shop is burnt. This is contingent.

Difference between Contingent Contract and Wagering Agreement

Based on distribution Contingent contract Wagering agreement

Void/Valid It is a valid contract. It is a void agreement.

It may or may not contain reciprocal

Reciprocal promise It contains reciprocal promises.
promises.
Main or collateral future A future event is collateral in the case of A future event is essential in case of a
events a contingent contract. wagering agreement.

Contingent may not be of a wagering Wagering agreement is always of

Nature
nature. contingent nature.

Its parties may have other interests as Its parties have no other interest in the
Interest of parties well. It is not a game and winning or subject matter of the agreement. It is a
losing doesn't matter. game-winning or losing that matter alone.

Essentials of contingent contract

There must be a valid contract to do or abstain from doing anything- For this essential the condition 1 and
condition 2 talks about the implementation of the contingent contract on the happening or not happening of
the events or works that needs to be done respectively. The contract will be valid only if it talks about
performing or not performing an obligation.

Performance of the contract must be conditional:

The conditions or the reasons for which the contract that has been entered into must be a future event, and
it should be uncertain. If suddenly the performance of the contract is dependent on an event, which may be a
future event, but certain and is sure to happen, and then it'll not be considered as a contingent contract.
 The said event must be collateral to such contract:
The event for or on whose happening or due to non-happening of the event for which the performance
of such contract is dependent, must not be a part of the consideration of the given contract. The
happening or non-happening of the event should be as a security to the contract and should be
existing independently.
 
 The event should not be at the discretion of the promisor:
The contract must not be dependent on the promisor and should be fully or totally futuristic and can
be an uncertain event.

Enforcement of Contingent Contracts

Section 32 to 36 of the Indian Contract Act, 1872, lists certain rules which are related to the enforcement of
contingent contracts.

The sections are as follows:

1st condition
Section 32- Enforcement of contracts contingent on an event happening

'Contingent contracts to do or not to do anything if an uncertain future event happens cannot be enforced by
law unless and until that event has happened. If the event becomes impossible, such contracts become void.'
A contingent contract is to do or abstain from doing anything if an uncertain future event happens. The
contract, however, cannot be enforced by law until the event takes place. If the happening of an event
becomes impossible then such contracts become void.

For example, Sagar makes a contract with Raman to pay Rs 30,000 if Raman marries Urmila. Unfortunately,
Urmila dies in a car accident. Since the happening of the event becomes totally impossible, thus the contract
becomes void.
Case- Nandkishore Lalbagh vs New Era Fabrics Pvt.Ltd.& Ors . (2015) 9 SCC 755 , AIR 2015 SC 3796 , a
contract for the sale of land with a factory was to be performed only if the labor unions agreed to the sale
and further if the change of land use was approved by the appropriate authority. None of these contingencies
could be fulfilled because neither there was approval by the labor union nor by the relevant authority. The
contract was accordingly not allowed to be enforced against the seller.

2nd condition
Section - 33 Enforcement of contracts contingent on an event not happening.
'Contingent contracts to do or not to do anything if an uncertain future event does not happen can be
enforced when the happening of that event becomes impossible, and not before.'

A contingent contract is to do or abstain from doing anything if an uncertain future event does not happen.
The contract, however, can be enforced by law until the event becomes impossible. If the event takes place,
then the contingent contract is void.

Prakash agrees to pay Prasun a sum of money if a certain ship names Georgia does not return. The ship is
sunk. The contract can be enforced when the ship sinks. On the other hand, if the ship returns, then the
contract is void.

Case:

Gian Chand Vs Gopala and Ors 1995 SCC (2) 528, JT 1995 (2) 513, in this case, there was an agreement to sell
the land that provided that the earnest money would be returned in case the land is notified for acquisition.
Unknown to the parties, the land was already under notification. The contract became impossible for
performance and therefore void on declaration under section 6 of the Land Acquisition Act.

3rd condition
Section- 34 When an event on which the contract is contingent is to be deemed impossible, if it is the future
conduct of a living person.

'If the future event on which a contract is contingent is the way in which a person will act at an unspecified
time, the event shall be considered to become impossible when such person does anything which renders it
impossible that he should so act within any definite time, or otherwise than under further contingencies.'
In this section if there is a future event that tells about a contingent contract that is made in such a way that
the person will do an act that will be at an unspecified time than the event will be considered to become
impossible and that he should do the act within a specified time or will be under further contingencies.

Example: Amit agreed to pay Saranya a sum of money if Saranya marries Chandan. But Chandan married
Daina. The marriage of Saranya to Chandan must be considered impossible, although Daina may die, and
Chandan afterward may marry Saranya.

Case:

Frost Vs Knight (1872) 7 Ex. 111 : 41 L.J. Ex. 78 : 26 L.T. 77

the defendant promised to marry the plaintiff on the death of his father. While the father was still alive, he
married another woman. it was held that it had become impossible that he should marry the plaintiff and she
was entitled to sue him for the breach of contract.

4th condition
Section- 35

a. When a contract become void which are contingent on happening of specified event within fixed time.
'Contingent contracts to do or not to do anything if a specified uncertain event happens within a fixed
 time becomes void if, at the expiration of the time fixed, such event has not happened, or if, before
the time fixed, such event becomes impossible.'

A contingent contract is to do or abstain from doing anything if a future uncertain event happens
within a fixed time. If the event does not takes place and the time-lapses and if before the fixed time,
the happening of the event becomes impossible, then in that case such a contract becomes void.
For example, Geeta promises Sanjay to pay a sum of money if a ship named California returns before
1st April 2018. The contract may be enforced if the ship returns within the fixed time. On the other
hand, it becomes void if the ship sinks.
 
b. When contracts may be enforced, which are contingent on specified event not happening within fixed
time.
'Contingent contracts to do or not to do anything, if a specified uncertain event does not happen
within a fixed time may be enforced by law when the time fixed has expired and such event has not
happened or, before the time fixed has expired, if it becomes certain that such event will not
happen.'

A contingent contract is to do or abstain from doing anything if a future uncertain event does not
happen within a fixed time. In such a case, the contract may be enforced by law when the fixed time
has expired and the event has not happened before the expiry of the fixed time. Also, if it becomes
certain that such an event will not happen before the expiry of the fixed time, then it can be enforced
by law.

For example, Geeta promises to pay a sum of money to Sanjay if a ship named California does not
return before 31st March 2018. The contract may be enforced if the ship does not return before 31st
March 2018. Also, if the ship is burnt before the given time, then the contract can be enforced by law
since the return of the ship becomes impossible.

5th condition
Section-36 Agreement contingent on impossible events void.
Contingent agreements to do or not to do anything, if an impossible event happens, are void, whether the
impossibility of the event is known or not to the parties to the agreement at the time when it is made.
A contingent agreement to do or not do anything is based on an impossible event, then in such a case, the
agreement becomes void. This is regardless to the fact that whether the parties are aware of the impossibility
of the event or not at the time when the agreement was made.

For example 1. Ram agrees to pay Sita Rs 5000 if the Sun rises in the west on Wednesday. This agreement is
void since the happening of the event is impossible.

Atish agreed to pay an amount of Rs300 if clocks move anticlockwise after putting in a new battery. This
agreement is void as this event of anticlockwise of a clock is impossible.

Real-life Use.
Contingent contracts are used in our daily life. Mainly for businesses, it is being used in negotiations where all
goodwill and trust that is created can disagree in front of the negotiating opposite party about future events
that need to work, in that case, a contingent contract is of great use.

In a life insurance contract, the insurer has to pay a certain amount if suddenly the insured person dies due to
certain conditions due to which the insurer will not be called for action of taking the amount until the death
which is an event that has happened so in this case contingent contract is required.

Advantages
A Contingent contract has a lot of advantage which specifically negotiator can also use:
 It helps to eliminate the need to come into agreements as it will help the parties to bet on predictions
which keeps differences among the parties but this is only helpful in case of negotiations.
  It can limit the losses that could happen if the contract failed in fulfilling the conditions.
 It does not offer the scope of litigation by reducing the conflicts which are involved in it as these
events are the future of what would happen.

Conclusion
A Contingent contract is used in daily life and it tells about those contracts where a promise is conditional
and on the happening and non-happening of some uncertain future event the contract shall perform. So it
helps to perform actions that are required in insurance or guarantee or negotiation. But this type of contract
cannot be used in normal contracts.