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Quasi contract 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.
Under common-law jurisdictions, quasi contracts originated in the Middle Ages under a form of action known in Latin as indebitatus assumpsit, which translates to being indebted or to have undertaken a debt.
This legal principle was the courts' way of making one party pay the other as if a contract or agreement already existed between them. So the defendant’s obligation to be bound by the an exchange is viewed to be implied by law. From its earliest uses, the quasi contract was typically imposed to enforce restitution obligations.
It would be handed down ordering the defendant to pay restitution to the plaintiff. The restitution, known in Latin as quantum meruit, or the amount deserved, is calculated according to the amount or extent to which the defendant was unjustly enriched.
This remedy is also referred to as a constructive contract as it is constructed by a judge when there is no existing contract between two parties. If there is an agreement or contract already in place, a judge will not create a quasi contract because there is no need to do so.
Implied-in-law contract is an alternate name for a quasi contract.
Quasi contracts outline the obligation of one party to a second when the first receives a benefit or property from the second. A person might knowingly or unknowingly give something of value to another without an agreement being made. It is assumed that a reasonable person would pay for it, give it back, or otherwise compensate the giver upon receiving the item or service.
Quasi contracts are awarded as a remedy to a giver to keep them from being taken advantage of and keep others from being unjustly enriched.
Because the agreement is constructed in a court of law, it is legally enforceable, so neither party has to agree to it. The purpose of the quasi contract is to render a fair outcome in a situation where one party has an advantage over another. The defendant—the party who acquired the property—must pay restitution to the plaintiff—the wronged party—to cover the value of the item.
Certain aspects must be in place for a judge to issue a quasi contract:
| Quasi Contract | Contract |
|---|---|
| Only Implied in Law | Can Be Express or Implied |
| Ordered by a Judge | Initiated by Party Agreement |
| No Contract Exists | A Legal Contract Exists |
The types of quasi contract are outlined in sections 68 thru 72 of the Contract Act of 1872, as follows:
Unjust enrichment is what happens when an individual benefits from a situation inappropriately, either because of luck or because of another person's bad fortune.
Advantages of using a quasi contract include the fact that these legal instruments are typically based on the unjust enrichment principle. This prevents one party from gaining an undue advantage over another. Thus, it is a safeguard for innocent victims of wrongful acts and a legal alternative to compensation for damages, ensuring that the one who provides services or goods gets compensated for the same. In order to comply with quasi contracts, all parties involved are obliged to follow them, as they are created by court order.
There are also some drawbacks or limitations. Those who received benefits negligently, unnecessarily, and by miscount will not be held liable. Although a person can be liable under a quasi contract, he cannot be charged more than the amount he has received under the contract. Thus, there is no provision available for the recovery of more amount than that which has been received by the plaintiff - if the plaintiff obtains only part of the services/goods that he contracted for originally, he cannot claim a compensation as the whole amount is not recovered.
If there's an express agreement between the parties, plaintiffs have to give up all profits. Though a quasi contract is a legal remedy that provides protection from unjust enrichment of the beneficiaries of the services or goods, a plaintiff can get relief only if he can prove that he has suffered losses due to the breach of the contractual obligations of the defendant.
