Differences Between Contract and Quasi-Contract.

A contract is an agreement between two or more parties, which is enforceable by law[1]. The contracts made between competent parties, having lawful consideration and object are called valid contracts or legitimate contracts.[2] Examples of valid contracts- the owner offers a person his car and the person accepts the offer, they agree upon a certain date for the transaction, hence entering into a valid contract. A person takes a loan from a bank and signs a contract promising to pay back along with the interest amount, which is legitimate.

The essential elements for a contract to be valid are:

  1. There should be a legitimate offer, which should be followed by an acceptance, culminating in an agreement[3].
  2. The agreement should not be illegal or void. For example, a person paying another person to kill someone and signing an agreement for the same, cannot be considered as a contract. It is a void contract, which is not enforceable by law.
  3. There should be a minimum of two parties who are competent[4] enough to be a part of a contract. Every person or entity is competent who is- a major i.e. 18 years or above, of sound mind and not disqualified by law from contracting.
  4. The consent of both parties should be genuinely taken and should be free from any coercion, undue influence, fraud, misrepresentation, or mistake.[5]
  5. They should have the intention to create a legal relationship.
  6. The contract should have a lawful consideration[6], which is the act or abstinence specified in the contract.
  7. The objective of the contract should also be lawful.
  8. The contract should have certainty of meaning.
  9. There should be a possibility of performance of the specified act or abstinence.
  10. All the necessary legal formalities should be carried out properly for the validity of the contract.

Quasi-contract

The word ‘Quasi’ literally means pseudo or false. So a Quasi-contract is a pseudo contract which means that it is not a contract technically but resembles to be one. “Nemo debet locupletari ex aliena jactura” is a Latin Maxim which means, nobody should be benefited at the cost of another, or nobody should be enriched at the cost of another’s loss. The Quasi-contracts have arisen from this maxim. For example, if a package is delivered at the wrong address by mistake, then the owner of the house should find out the rightful owner of the package and return it, and if the contents of the package are consumed or used up, then the rightful owner of the package deserves compensation equal to the cost of it.

Features of a quasi-contract

  • A Quasi-contract does not involve an offer or acceptance, thus there is no direct agreement between the parties.
  • It is entirely based on natural justice, morality, and a good conscience.

Elements of quasi-contract

  • Though it is not an actual contract, it is still enforced by law.
  • It is similar to a contractual right and is available against a specific person and not against the whole world, i.e. a right in personam.
  • The individual who sustains any damages is entitled to receive monetary compensation.
  • A quasi-contract is assumed to be legally true, or in other words, it is a legal fiction.

Sections 68-72, of the Indian Contracts Act 1872  encompass different categories or situations under the Quasi-contract.

SECTION 68- claim for necessaries supplied to a person who is incompetent for contracting.

For instance, if a person has bestowed an incompetent person, like a minor or a lunatic with any necessary items, then he/she is entitled to reimbursement from the property of the incapable person, later or whenever required.

SECTION 69-  Reimbursement of the person who paid the money which was due by another, voluntarily

For instance, if an interested person pays off a loan on behalf of another, then the former person is entitled to reimbursement by the latter, which is bound by law.

SECTION 70- the obligation of a person who is enjoying the benefits of a non-gratuitous act.

For instance, if a person delivers some goods at another person’s house by mistake, not intending to do so, and the latter reaps the benefits of the non-gratuitous goods, then he is liable to restore the goods or compensate for them to the former.

SECTION 71- the responsibility of the finder of someone else’s goods.

For instance, if a person finds the goods of another and takes them under his Guardianship then he is bound by the law to take care of them as his own and to restore them to the owner. The finder is not supposed to use the found goods for his personal use, or even alter them.

SECTION 72- liability of a person to whom money is paid or a thing is delivered by mistake or under coercion.

For instance, if a person pays more than the cost of a good by mistake to the shopkeeper, then the shopkeeper is liable to return him the extra amount. Similarly, if a person has extorted money from someone, by coercion, then the latter is entitled to restoration or compensation.

Differences between contract and quasi-contract

  • A contract is a real agreement between two or more parties, but a Quasi-contract is not an agreement but resembles an agreement or a contract.
  • Under a contract, both parties give their consents freely, while under quasi-contract, there is no consent of either of the parties, as it is not voluntarily made.
  • Under a contract, liability exists according to the terms mentioned and agreed upon by both the parties, whereas under quasi-contract, the liability comes into existence through the conduct of the parties and is based on morality, natural justice, equity, and a good conscience.
  • General Contracts are entered into by interested parties voluntarily without any compulsion, whereas quasi-contracts are imposed by law.
  • General Contracts can be both rights in Rem (against the whole world) and rights in Personam (against any one person or entity). But quasi-contracts are only rights in Personam, these are only available against a specific person.
  • The Indian contracts act 1872 as a whole, encompasses everything about all kinds of contracts. A contract is defined in section 2(h) and sections 68-72 constitute all the information about Quasi-contracts.

[1] Indian Contract Act 1872, section 2 (h)

[2] Indian Contract Act 1872, section 10

[3] Indian contract act 1872, section 2 (a) and (b)

[4] Indian Contract Act 1872, section 11

[5] ICA 1872, sections 14-22

[6] ICA 1872, section 2(d)

This article is written by Shalini koppula, student of 1st year B.B.A LL.B at Xavier Law School Bhubaneswar.

Also Read – Essential Elements Of Valid Contract

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