Quasi Contracts is another name for a contract implied in law, which acts as a remedy for a dispute between two parties that don’t have a contract. A quasi contract is a legal obligation—not a traditional contract—which is decided by a judge for one party to compensate the other. Thus, a quasi contract is a retroactive judgment to correct a circumstance in which one party acquires something at the expense of the other. These arrangements may be imposed when goods or services are accepted by a party even though they might not have been requested. The acceptance then creates an expectation of payment for the providing party.

Types of Quasi Contract

The types of quasi contract are outlined in sections 68 thru 72 of the Contract Act of 1872, as follows:

Section 68: If someone incapable of making contracts, or someone legally responsible for them, receives supplies from a third party, that third party can recover the cost from the property of the incapable person.

Section 69: If you make a payment on someone else’s behalf, you have the right to be reimbursed according to the law. The person who benefited from the payment is obligated to repay.

Section 70: If you perform a lawful act for someone else or provide something without expecting a gift, the recipient is obligated to compensate you for your efforts or resources.

Section 71: If you find goods that belong to someone else and take possession of them, you are held responsible for them similar to a bailee. This implies a duty to care for the goods until they are returned to the rightful owner.

Section 72: If someone receives payment or goods under coercion or by mistake, they are obligated to repay or return the money or items to the rightful owner.

Advantages and Disadvantages of Quasi Contracts

Advantages of quasi contracts lie in their commitment to fairness, grounded in the principle of preventing unjust enrichment. This principle serves as a safeguard against one party gaining an unfair advantage over another. Essentially, it acts as a legal recourse for innocent victims of wrongful acts, offering an alternative to seeking compensation for damages. The beauty of quasi contracts is that they ensure rightful compensation for the provider of services or goods.

To comply with quasi contracts, all involved parties are obligated to adhere to them, given that they are established by court order.

However, there are limitations to consider. Individuals who have received benefits negligently, unnecessarily, or due to miscounts may not be held accountable. While someone can be liable under a quasi contract, the amount they can be charged with cannot exceed what they received under the contract. This means there’s no provision for recovering more than the received amount. If a plaintiff only receives a portion of the initially contracted services or goods, they cannot claim compensation for the entire amount.

In cases where there is an express agreement between parties, plaintiffs may have to forgo all profits. While quasi contracts provide a legal remedy to prevent unjust enrichment, plaintiffs can only seek relief if they can prove that they suffered losses due to the defendant’s breach of contractual obligations.

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