Quasi – Contracts and Unjust Enrichment (Section 68 to 72, Indian Contract Act) | Law Optional Notes for UPSC PDF Download

What is the Doctrine of Unjust Enrichment?

• The Doctrine of Unjust Enrichment refers to a situation where one person has unfairly benefited at the expense of another.
• Under this doctrine, the court may require the unfairly benefited party to return the benefits acquired unfairly or provide compensation.
• For instance, in the case of Moses v. McFarlon, it was established that the defendant must repay the money obtained unjustly as per principles of natural justice and equity.
• In India, the concept of implied contracts was introduced in the 1860s, as seen in the case of Rambux Chittangeo v. Modhoosoodun Paul Chawdhry, emphasizing the obligation to refund unjust gains.

Essentials of the Doctrine of Unjust Enrichment

• The defendant must have received an enrichment through unjust means.
• This enrichment should come at the expense of the plaintiff.
• The acquisition of enrichment should be deemed unfair or unjust.

Remedies of Doctrine of Unjust Enrichment

I. Section 68 of the Indian Contact Act, 1872

Supply for necessaries:

• Necessaries are goods or services essential for maintaining a person's well-being and status.
• Reimbursement is allowed if necessaries are supplied to a minor or incapable person, dependent on another.
• Example: Funeral expenses for a widow can be considered necessary.

II. Section 69 of the Indian Contract Act, 1872

• A person can recover money paid on another's behalf if the payer is interested and the payee is legally obligated.
• Illustration: Payment of taxes to prevent property sale can be recovered.

III. Section 70 of the Indian Contract Act, 1872

• If someone benefits from another's action without intent to do so gratuitously, compensation is owed.
• Illustration: A person treating another's goods as their own must pay compensation.

IV. Section 71 of the Indian Contract Act, 1872

• A finder of goods must act as a bailee, taking care of the goods responsibly.
• Illustration: Finding a lost item and safeguarding it until the owner is found.

V. Section 72 of the Indian Contract Act, 1872

Liability of person to whom money is paid, or thing delivered, by mistake or under coercion:

• If money is paid or goods delivered by mistake, the receiver must repay or return them.
• Illustration: Reimbursing money paid accidentally or under coercion.

Understanding Quantum Meruit and Unjust Enrichment

Quantum Meruit

• Occurs when a party has partially fulfilled a contract, but the remaining work becomes useless due to the actions of the other party.
• Compensation is based on the value of the work already completed, even in the absence of a written agreement specifying payment.
• For instance, if A agrees to perform at B's venue for a month but is prevented from doing so after ten days, A can claim payment for the ten days of performance.
• To seek relief under quantum meruit, the defendant must have benefited from the work completed by the plaintiff, allowing the plaintiff to consider themselves released from further obligations.

Unjust Enrichment

• Refers to the failure to compensate for services rendered.
• Quantum meruit involves determining a fair payment based on the value of work done, in the absence of a formal agreement.
• In such cases, the compensation is typically calculated according to the fair market value of the services provided.
• Unlike quantum meruit, unjust enrichment focuses on the benefit received by the defendant, rather than the losses incurred by the plaintiff if the contract had been fully executed.

Legal Implications in India

• The Indian Contract Act incorporates the concept of quantum meruit in Section 70.
• This section allows for compensation when an individual performs a lawful act for another's benefit without the intention of doing so for free.

Understanding Unjust Enrichment and Quasi Contract

Unjust Enrichment

• Definition: Unjust enrichment occurs when one person benefits at the expense of another without a legal reason.
• Origin: This concept originated from English Law.
• Effect: It results in one party suffering a loss while the other gains unfairly.

Quasi Contract

• Basis: The concept of quasi contract is built upon the principles of unjust enrichment and quantum meruit.
• Indian Context: In India, provisions relating to quasi contracts are outlined in Sections 68 to 72 of the Indian Contract Act, 1872.
• Legal Remedy: Courts may order the party who unfairly benefited to return the gains acquired unjustly or provide compensation.

Conclusion

• The theory of unjust enrichment highlights situations where one party gains unfairly at the expense of another, leading to a loss for the latter.
• Quasi contracts, drawing from unjust enrichment and quantum meruit, provide a legal framework to address situations of unjust gain.
• In India, Sections 68 to 72 of the Indian Contract Act, 1872, offer remedies for cases involving unjust enrichment and quasi contracts.