Unit VIII: Quasi-Contract

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  The concept of quasi-contract finds its origins in Roman law, under the principle
of obligatio quasi ex contractu (obligations resembling contracts). It was
developed to address situations where one party unfairly enriched themselves
at the expense of another without any formal agreement. Roman jurists
established that such an enrichment should not be retained, thus laying the
groundwork for restitutionary remedies.
 In English common law, quasi-contract evolved as a judicial response to fill the
gaps where no formal contract existed but equity demanded the imposition of
Evolution an obligation. Early cases treated these obligations under the umbrella of
"assumpsit," a form of legal action.
 Courts gradually refined the doctrine in cases like Moses v. Macferlan
(1760), where Lord Mansfield articulated the principle that law would impose
obligations to prevent unjust enrichment, even in the absence of an
agreement.
 Over time, this doctrine became a cornerstone of English restitution law,
functioning as a remedy for situations that required equity and fairness.
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 Development Under Indian Law
The Indian Contract Act, 1872, codified the concept of quasi-contracts
(quantum meruit) under Sections 68 to 72.
These provisions recognize and enforce obligations that arise not from mutual
agreements but from the principles of justice, equity, and good conscience.
The Indian legal framework, influenced by English law, treats quasi-contracts
as a separate category of obligations to address cases of unjust enrichment or
legal necessity.
Key Features of Quasi-Contracts
Quasi-contracts are distinct from express or implied contracts because they
do not arise from the parties' mutual consent.
Instead, they are obligations imposed by law to prevent unjust enrichment.
These obligations are remedial rather than consensual, aimed at ensuring 3
 Doctrine of Unjust Enrichment
 Nemo debet locupletari ex aliena jactura is a Latin phrase that means "no one
should grow rich out of another person's loss". It is the basis for the concept of
quasi-contracts.
 The doctrine of unjust enrichment is a fundamental principle of equity, obligating a
person to restore benefits or gains obtained unfairly at the expense of another. It
serves to prevent one party from being unjustly enriched while another suffers a
corresponding loss, even in the absence of a formal contract or agreement. This
doctrine underpins various areas of law, including restitution, tort, and quasi-
contracts.
 Essentials of Unjust Enrichment
 Enrichment of the Defendant: The defendant must have received a benefit,
either in the form of money, goods, or services.
 At the Expense of the Plaintiff: The benefit must have been derived directly or
indirectly at the plaintiff's cost.
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 Unjust Nature of the Enrichment: The enrichment must lack any legal or
Key Provisions of Quasi-Contracts in the Indian Contract
Act
Section 68: Responsibility of a person to pay for the supply of
necessaries. This applies when someone supplies goods or services to a
person incapable of contracting, such as a minor or a mentally
incompetent person.
Section 69: Reimbursement of expenses incurred by someone who pays
money on behalf of another under legal compulsion. For example, if a
third party pays a debtor's obligation to prevent legal consequences, the
debtor is bound to reimburse.
Section 70: Obligation of a person enjoying the benefit of a non-
gratuitous act to compensate the provider. This prevents a party from
unjustly enriching themselves at another's expense.
Section 71: Liability of a person who finds goods belonging to another
and retains them. This section ensures that the finder acts as a custodian
and must return the goods or compensate the owner.
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Section 72: Liability for receiving money or goods under mistake or
 Moses v. Macferlan (1760)
Moses, the plaintiff, signed a promissory note as a guarantor for a loan between two
other parties. When the primary borrower defaulted, the lender, Macferlan, sued
Moses under the note and obtained judgment. Moses paid the judgment amount but
later realized that he should not have been held liable as per a prior agreement with
the lender that the note would not be enforced against him.
Moses subsequently brought an action of indebitatus assumpsit (a type of legal
action to recover money paid by mistake) to recover the amount he paid, arguing
that it was unjust for Macferlan to retain the money under the circumstances.
Issue: Was Moses entitled to recover the money he paid to Macferlan on the
grounds of unjust enrichment, even though the payment was made pursuant to a
judgment?
Judgment: Lord Mansfield ruled in favor of Moses and established the foundational
principle of unjust enrichment. He held that Macferlan was unjustly enriched at
Moses' expense, as the payment was made under circumstances where it was
inequitable for Macferlan to retain the money. 6
Reasoning:
Principle of Justice and Equity: Lord Mansfield emphasized that
the law allows recovery of money that has been unjustly retained.
The obligation arises not out of any formal agreement but from
principles of natural justice.
Nature of Quasi-Contracts: Mansfield explained that quasi-
contracts are not real contracts but are legal obligations imposed by
courts to prevent unjust enrichment. These obligations arise where
justice demands restitution.
Restitution for Mistake: The court noted that Moses made the
payment under a mistake about his liability on the promissory note,
and since there was an agreement that the note would not be
enforced against him, retaining the money would be unjust.
Judicial Discretion in Equity: The court recognized its authority to
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intervene when enforcing strict legal rules would lead to inequitable
State of West Bengal v. B.K. Mondal & Sons AIR 1962 SC 779
 B.K. Mondal & Sons (the plaintiff) entered into an agreement with the State of West
Bengal to construct a structure for the use of government offices. The work was
completed, and the premises were used by the government. However, the government
refused to pay the contractor, arguing that the agreement was void because it did not
comply with the formal requirements of Article 299 of the Constitution of India, which
prescribes the manner in which government contracts must be executed. The plaintiff
initiated a suit for recovery of the cost of the work and materials supplied, claiming
compensation based on principles of equity and restitution, arguing that the government
had been unjustly enriched.
 Judgment: The Supreme Court ruled in favor of B.K. Mondal & Sons and held the
government liable to compensate the contractor under Section 70 of the Indian Contract
Act.
 Reasoning: (1) Non-Gratuitous Acts under Section 70: Section 70 of the Indian
Contract Act provides that if a person lawfully does something for another or delivers
something to another that is not intended to be gratuitous, the recipient is bound to
compensate or restore the goods if they have been enjoyed or retained.
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 The contractor’s work was done lawfully, and the use of the premises by the government
(2) Article 299 of the Constitution: While Article 299
prescribes the requirements for contracts involving the
government, it does not prevent a claim under Section 70.
The contractor's claim was not based on the invalid
agreement but on the principles of restitution.
(3) Unjust Enrichment: The government was enriched by
using the constructed premises without compensating the
contractor. Denying the claim would allow the government
to benefit unjustly, contrary to principles of equity and
fairness.

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Thank you