Doctrine of Estoppel

INTRODUCTION: WHAT IS QUASI CONTRACT

A Quasi-contract is not a contract at all because one or the other essentials for the formation of a contract are absent. The term “Quasi” is a Latin word, which means as ifor Similarly”. It means seemingly, apparently, but not really.

Chapter V containing Sections 68 to 72 of the Indian Contract Act lays down provisions relating to Quasi Contracts although this term has not been used as such rather these transactions have been recognised as Certain relations resembling those created by contracts. These are contracts implied in law as implied contracts. It means a contract which lacks one or more of the essentials of a contract. Quasi contract are declared by law as valid contracts on the basis of principles of equity and the doctrine of unjust enrichment. i.e. no person shall be allowed to enrich himself unjustly at the expense/cost of another & the legal obligations of parties remains the same as that in a contract. This concept was propounded in the case of Moses v. Mc Furlong by Lord Mansfield.

Nature of a Quasi Contract

  • A quasi contract does not arise from any formal agreement but is imposed by law.
  • Every quasi contract is based upon the principle of equity and good conscience.
  • A quasi contract is always a right to money and generally though not always to a liquidated sum of money.
  • A suit for its breach may be filed in the same way as in case of a complete contract.
  • The right granted to a party under a quasi contract is not available to him against the whole world but against particular person(s) only.
  • A suit for breach of a quasi contract may be filed in the same way as in case of an ordinary contract.
  • Although there is no express or implied contract between the parties under a quasi contracts yet they are put in the same position as if there is a contract between them.

Types of Quasi Contracts

  1. Supply of necessities (Sec.68)
  2. Payment by an interested person (Sec.69)
  3. Obligation to pay for non gratuitous act (Sec.70)
  4. Responsibility of finder of goods (Sec.71)
  5. Mistake or Coercion (Sec.72)

PROVISIONS RELATING TO VARIOUS QUASI CONTRACTS ARE CONTAINED UNDER SECTIONS 68 TO SEC 72 OF CONTRACT ACT, 1872

1. Section 68 of Indian Contract Act: Supply of necessaries to a person not competent to contract

If a person, incapable of entering into 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.

Only the property of the incapable person is liable for reimbursement, not the person himself for the obvious reason that he is incompetent to contract. Where he doesn’t own any property, nothing shall be payable. There is no definition of the term ‘necessaries’. What constitutes necessaries is a question of fact and depends upon the facts and circumstances of the case. Moreover, what is luxury to one person may be a necessity to another.

Example: A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled to be reimbursed from B’s property. Landmark case: Nash v. Inmann (1908)

2. Section 69: Reimbursement i.e. right to recover money paid for another person

Payment by a person who is interested in such payment is recoverable as an equitable right. A person, who is interested in the payment of money and pays such money, which another is bound by law to pay, is entitled to be reimbursed by the other.

3. Sec. 70: Obligation of person enjoying benefit of non-gratuitous act.

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 benefits thereof then he is bound to make compensation to the other in respect of, or to restore the thing so done or delivered.

Example 1: A, a tradesman, leaves goods at B’s house by mistake. B treats the goods as his own. He is bound to pay A for them.

Example 2: A saves B’s property from fire. A is not entitled to compensation from B, if the circumstances show that he intended to act gratuitously.

Section 70 corresponds to what in England is called “Actions for Quantum Meruit” which means as much as is deserved’.

In State of west Bengal v B.K. Mondal and sons, the respondents constructed certain structure including a kutcha road, guardroom, office, kitchen and storage sheds at the request of some officers of the appellant, i.e., the state of west Bengal for the use of the civil supplies department of the government. The respondent claimed a sum of Rs.19325 for these works. The appellant, trying to escape the liability, alleged that the request in pursuance of which construction were made were invalid and unauthorized and did not constitute valid contract binding the appellant, under section 175(3) of the government of India Act, 1935. It was held that the appellant having accepted the benefit of the structure constructed for it. He was therefore held liable under section 70 to pay for the same.

4. Sec. 71: Responsibility of finder of goods.

A person who finds goods belonging to another and takes them into custody, is subject to the same responsibility as that of a bailee i.e. duty to take reasonable care of the goods, duty not to use the goods for his own purpose, duty not to mix the goods with own goods, right to recover reasonable expenses, reward, or even to sell the goods lawfully.

 Finder’s right to sell Under Sec. 169, the finder of goods has the power to sell them when-

  1. The owner of the goods cannot with reasonable diligence be found, or he refuses, upon demand, to pay the lawful charges of the finder, and
    1. Either the thing found is in danger of perishing or of losing the greater part of its value, or, in case the goods are not of perishable nature, but the lawful charges of the finder, in respectof the thing found, amount to two-thirds of its value.

5. Sec.72: Money paid under a mistake or coercion.

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

Compensation for failure to discharge obligation created by Quasi contract [Section 73]

When an obligation created by quasi contract is not discharged the injured party is entitled to reline the same compensation from the party in default as if such person had, contracted to discharge is and broken his contract.

Also Read: Offer and Acceptance Under Indian Contract Act

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