Contract A contract is a legally enforceable agreement between two or more parties. The core of most contracts is a set of mutual promises (in legal terminology, “consideration”). The promises made by the parties define the rights and obligations of the parties. Example: Developer promised to pay Graphic Designer $5000 for creating certain promotional materials for Developer’s multimedia work. Graphic Designer created the materials and delivered them to Developer, as required in the contract.
Developer admits that the materials meet the contract specifications. If Developer does not pay Graphic Designer, Graphic Designer can go to court and get a judgment against Developer for breach of contract. Formation of Contract Following are the four stages in formation of contract * Proposal * Acceptance * Promise or agreement * Contract Kinds of Contracts The topic that I am going to describe is Quasi Contract. Quasi Contract It is based on principle of equity that no one shall be allowed to become rich unjustly at the expenses of another.
A Quasi contract is one which is not based on agreement of the parties but is created by law whereby an obligation is imposed on one party and an action is allowed to be brought by another party. It is an obligation that the law creates in the absence of an agreement between the parties. It is invoked by the courts where unjust enrichment, which occurs when a person retains money or benefits that in all fairness belong to another, would exist without judicial relief. A quasi contract is a contract that exists by order of a court, not by agreement of the parties.
Courts create quasi contracts to avoid the unjust enrichment of a party in a dispute over payment for a good or service. In some cases a party who has suffered a loss in a business relationship may not be able to recover for the loss without evidence of a contract or some legally recognized agreement. To avoid this unjust result, courts create a fictitious agreement where no legally enforceable agreement exists. Examples 1. Sarah a business person deposited rupees 10,000 to Sana for safety and security. Sana used the money for her domestic purposes. Sana is liable to pay rupess 10,000 to Sarah.
This is a Quasi Contract. 2. Rabia finds certain item belonging to Aneeqa. She keeps these items with her and incurs certain expenses in search of Aneeqa. There is Quasi Contract Aneeqa is Liable to pay expenses incurred by Rabia. Salient Features of Quasi Contract: * It does not arise from any agreement of the parties concerned, but it is imposed by law over one or both parties * It is right that is available not against the entire world, but against particular person only. Conditions of Quasi Contract * Supply of necessaries * Liability to pay for non-gratuitous Acts * Finder of Goods
* Mistake or Coercion * Payment by an interested person Supply of Necessaries: When necessaries are supplied to a person who is incompetent to contract or to some one whom he is legally bound to support, the supplier is entitled to recover the price from the property of incompetent person. Sec 68 says “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.
” The following points must be noted: Only the property of incompetent person is liable, personally he is free from every liability. * There must be necessaries, not luxuries * Necessaries should be supplied only that incompetent person or to some one whom he is legally bound to support, such as his wife and children. * Property of incompetent person is liable to pay only a reasonable price and not the contract price. Example: Ali offers Shahid (A minor) to supplies necessaries suitable to his condition in life. Shahid accept the offer.
Ali is entitled to be reimbursed from Shahid property. There is Quasi Contract between Ali and Shahid by which Ali is entitled to recover the price of necessaries from the property of Shahid. Payment by an Interested Person: Sec 69 says “A person, who is interested in the payment of money which another is bound by law to pay and who therefore pays, is entitled to reimburse by other. ” Where one person pays the debts of another person and is interested to recover the amount so paid. The other person on whose behalf the debt is paid is lawfully bound to pay the amount to his benefactor.
Example: John agrees to purchase a car from Peter at a price of 500 dollars. Peter have lease his car from American Bank which two installments still unpaid. John receives final notice from Bank for the payment unpaid installments to avoid the complications of repossessions by the Bank. John pays the unpaid installments on the behalf of Peter. Peter is bound to pay these installments to John. Conditions of Liability: The conditions of liability under this section are as follows: * It is necessary that the person himself should not be bound to pay.
* The person should be interested in making the payment, the interest which person seeks to protect must however be legally recognizable. * The dependent should have been bound by law to pay the money e. g. where a person is only morally bound and is not legally compellable to pay he will not be bound to pay to discharge his moral obligation. Liability to pay for Non-Gratuitous Acts In simple words when a person render may service or provide goods to another person, not free of cost, he has a right to receive his remuneration or cost from other person.
Sec 70 says “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 benefit thereof. The latter is bound to make compensation to the former in respect of or to restore the thing so done or delivered. ” conditions of liability under this section are as under: * The person doing the act should not have intended to do it gratuitously. * The service should have rendered lawfully. * The person for whom the act is done must have enjoyed the benefit of it. Example:
Fahad sends certain goods to Fawad on “Sale or return basis” Fawad use the goods personaly. Fahad can claim the piece ofgoods from Fawad. Ayesha saved Hina’s goods from theft. Ayesha is not entitled to compensation from Hina. If circumstances show that she indented to act gratuitously. Finder of Goods According to sec. 71 “A person who finds goods belonging to another and takes them into his custody is subject to the same responsibility as a owner of good. The duties and liabilities of finder are the same as owner of good. Rights of a finder of goods Following are the rights of finder of goods:
* He can sue the actual owner for the specific reward announce for the return of goods and recover the award. * He has a right to recover his expenses which he spent for finding out the actual owner. * He is entitled to recover charges which he spent in preserving the goods. * If the goods are perishable in nature, he can sell the goods. * He can sell the goods if his lawful charges exceed two third of the value of goods. The actual owner is entitled to get the balance of sale proceeds. In short, all rights that owner of goods had on that good, finder of goods will have that.
Liabilities of Finder of goods: Liabilities of Finder of Goods are: * He must try to search the real owner of the goods. * He should avoid using the goods personally. * On finding of real owner, he should deliver the goo to him without any delay. * He must take proper care of goods. * He should not mix the goods with his own goods. Mistake or Coercion According to Sec. 72 “ A person to whom money has been paid or anything deleiveerd by mistake or under coercion, must repay or return it to the person who paid it by mistake or under coercion.
Example: A birthday cake is delivered under a mistake to Alina who used the cake thinking that as a present. Alina must return the parcel or pay for the cake. Examples of Quasi Contract * An example of a quasi-contract is the case of a plumber who accidentally installs a sprinkler system in the lawn of the wrong house. The owner of the house had learned the previous day that his neighbor was getting new sprinklers. That morning, he sees the plumber begin installing them in his own lawn.
Pleased at the mistake, he says nothing, and then refuses to pay when the plumber hands him the bill, claiming that he never agreed to pay for the sprinklers. If the plumber can prove that the man knew that the sprinklers were being installed mistakenly on his property and failed to prevent the installation, the court would make him pay under a quasi-contract theory. If that knowledge could not be proven, he would not be liable * A car owner brings his car in for brake repairs. The mechanic fixes the brakes and in doing so he also fixes a separate part of the axle that has a direct relationship to the car’s ability to break correctly.
Although the axle repair was not specifically contracted for, a quasi contract is implied for which the owner must pay the mechanic. * A homebuilder has built a house on Alicia’s property. However, the homebuilder signed a contract with Bobby, who claimed to be Alicia’s agent but, in fact, was not. Although there is no binding contract between Alicia and the homebuilder, most courts would allow the homebuilder to recover the cost of the services and materials from Alicia to avoid an unjust result.
A court would accomplish this by creating a fictitious agreement between the homebuilder and Alicia and holding Alicia responsible for the cost of the builder’s services and materials. Case Studies on Quasi Contract Case Study 1 Situation: * A minor naughty who have enough assets to fulfill his obligations bought eatables to consume as lunch from a mess and refused to pay on the basis of the argue that being a minor he is not bound towards any contractual liability. Results: * The minor naughty is legally indebted towards the payment for the eatables he has consumed.
* There exists a Quasi Contract between the mess owner and the Naughty. As the naughty consumed the eatables in nature of necessity. Case study 2: Situation * A landlord lends his premises to a paying guest for a term of 2 years. * The paying guest was unaware of the fact that electricity bill is due for last two months for the premises that he took on rent * Paying guest received a letter from electricity department regarding due bills asking to pay in 2 days or else the electricity will be disconnected. Action of paying guest:
* Paying guest, without asking the landlord, paid the bill * And he asked the Land Lord for repayment of the amount paid. Action of Land Lord: * Landlord refused to do so… * He argued that he had no intentions to pay bill. * And the paying guest had no duty towards paying the bill Results: * The Contention of Landlord was invalid under the light of the provision laid down in The Indian Contract, 1872. * In this situation, the Quasi Contract had been made between Land Lord and Paying Guest. Case Study 3 Situation:
* A person went to market to buy a car, being unfair regarding the price of car he mistakenly paid to seller a sum of 3 Lac, instead of paying 2. 5 Lac only. * On discovering the foolishness of himself, he asked seller to return back his 50 Thousand but the seller refused by saying that: “Once Gone, Forever Gone” Results: * Under the provision of law, Money paid under Mistaken or coercion is recoverable. * A quasi Contract had been made between the Payer and Payee. * Now, the person who paid mistakenly, is legally empowered to recollect the sum of rupee 50,000 Case study 4.
Situation: * Mr. James was going to theater driving his car. Near the theater, he saw a parking lot and thinking that it would be free parking provided by the theater authority. The parking operator had nothing to do with theater and without knowing that Mr. James was under a mistake he allowed him to park the car in lieu of some consideration. * On return of Mr. James, parking lot operator asked for the payment, but Mr. James Refused to pay and argue that he was under illusion that parking was free. Results:
* The case is under the provision related to the Quasi Contract. * The act of providing service by Parking lot operator was not free or non gratuitous. * It is immaterial that while parking Mr. James was aware of non-gratuitous nature or not * Mr. James is legally indebted towards Parking Lot Operator to the payment of charges. References: * http://law. jrank. org/pages/9603/Quasi-Contract. html * http://ca4all. blogspot. com/2011/05/quasi-contracts-section-68-72. html * BOOK: Business Law BY Qazi Awais Amin * http://www. answers. com/topic/quasi-contract.