Most of us are familiar with the term contract, which refers to a legal agreement that binds the parties with duties and obligations. The consenting parties agree to the conditions of the contract, either orally or in writing, and such contracts are enforceable in a court of law. In order to be classified as a true and valid contract, there must be an offer and acceptance between the parties for a valid and legal consideration.
However, there is one type of contract, wherein these factors are not needed for the formation of a contract. In fact, there is no contract between the parties, till the court creates one. A quasi contract, which is otherwise known as an implied-in-law contract or an implied contract; is created by the court, to prevent unjust enrichment of one party at the expense of the other.
What Does a Quasi Contract Mean?
It is defined as an arrangement created and enforced by a court, to prevent unjust enrichment of one party, in the absence of a valid contract between the parties. In short, when there is an absence of a contract between the parties, the court implies that there is a contract, according to which the parties are binding. The meaning of quasi contract can be explained with the following example.
A is knocked down by a vehicle. B, a stranger, who found A on the road in an unconscious state, takes A to a doctor. C, the doctor, provides treatment to A, who is in an unconscious state. In such a situation, there is no contract between A and C; and A can claim that he is not liable to pay for the services offered by the doctor, as he was unconscious at the time of treatment, and there is no agreement between the two.
In this case, the doctor (C) has spent his valuable time to treat the accident victim (A); and so A is liable to pay the doctor, for the services rendered. If A fails to do so, the court can apply the doctrine of quasi contract, and order A to pay C. This is to prevent the unjust enrichment of A at the expense of C. So, in a quasi contract, there is no contract between the parties to the dispute, but the court implies that there is a contract, and imposes an obligation on the defendant, to pay for the services rendered by the plaintiff.
In general, the quasi contract doctrine is applied in disputes regarding payment of goods delivered or services rendered. If there is no valid contract between the parties; the main question that arises in such situations, is about the liability of the defendant. As the aim of this doctrine is to prevent unjust enrichment of one party, at the expense of the other; the damages are usually restricted to the value of the services rendered or the cost of the materials delivered.
In short, the liability of the party who has enjoyed unjust benefits, is limited to the value of that benefit only. If the damages exceed that value, the whole concept of quasi contract will be defeated, as it will be unfair for the defendant.
Quasi Contract and Implied-in-fact Contract
The characteristic feature of a quasi contract is the absence of a contract or a mutual consent between the parties. Such contracts are often confused with implied-in-fact contracts. Implied-in-fact contracts are also not contracts in the true sense, as they lack a written agreement. In case of the latter, even though there is no contract between the parties as per the facts; the actions and words of the parties amount to mutual consent over the disputed matter.
The difference between the two can be illustrated with an example. A approaches a doctor for treatment. Here, there is a mutual consent between A and the doctor. As A expects treatment from the doctor, the doctor expects payment from A for his services. This is an example of implied-in-fact contract, wherein the conduct of the parties suggested a mutual consent. However, in a quasi contract (as per the example given above), the parties to the dispute did not even know each other. So, there is no question of consent between them.
In short, unlike normal contracts, in a quasi contract, the obligation does not arise from a written legal agreement; but from the facts of a particular case, and the rules of equity. The obligation is created by the court, which assumes that there is a valid contract between the parties.