Quasi-Contracts under Sections 68–72 of the Indian Contract Act, 1872
Not every legal obligation to pay arises from an agreement. In certain situations, the law itself creates an obligation because one person has received a benefit that they should not retain without making the appropriate payment or restitution. These obligations are commonly described as quasi-contracts.
The Indian Contract Act, 1872 deals with these obligations in Chapter V, “Of Certain Relations Resembling Those Created by Contract,” covering Sections 68 to 72. Unlike an ordinary contract, a quasi-contract does not arise from offer, acceptance or consent between the parties. The obligation is imposed by law.
What Is a Quasi-Contract?
A quasi-contract is not a contract in the strict sense because there is no agreement between the parties. Instead, the law creates an obligation in circumstances where one person has received a benefit at another’s expense and the law requires the appropriate reimbursement or restitution.
The principle is reflected in State of West Bengal v. B.K. Mondal & Sons, AIR 1962 SC 779, where the Supreme Court treated the obligation under Section 70 as a statutory obligation resembling a contractual obligation even though no valid contract existed between the parties.
The Indian Contract Act recognises five categories of quasi-contractual obligations under Sections 68 to 72.
Section 68 – Necessaries Supplied to a Person Incapable of Contracting
Section 68 applies when necessaries are supplied to a person who is incapable of entering into a contract, such as a minor or a person of unsound mind. The person supplying the necessaries can claim reimbursement from the property of that incapable person.
The liability is therefore not a personal contractual liability of the minor or other incapable person. The claim is limited to their property. The goods or services must qualify as necessaries, and their necessity depends upon the person’s circumstances and existing requirements. In Nash v. Inman, [1908] 2 KB 1, a claim relating to clothing supplied to a minor failed because there was insufficient evidence that the clothing was necessary in the circumstances.
Section 69 – Reimbursement of a Person Paying Money Due by Another
Section 69 applies where a person is interested in the payment of money that another person is legally bound to pay. If the interested person makes the payment to protect their own interest, they may recover the amount from the person who was legally bound to make the payment.
The provision therefore concerns reimbursement for a payment made to discharge another person’s legal obligation. In Govindram Gordhandas Seksaria v. State of Gondal, the Privy Council applied this principle where payment was made to protect an existing interest in property from the consequences of unpaid municipal dues.
Section 70 – Benefit of a Non-Gratuitous Act
Section 70 deals with a person who lawfully does something for another person, or delivers something to them, without intending to do so gratuitously, and the other person voluntarily accepts the benefit.
Three conditions are central to a Section 70 claim:
- The act or delivery must be lawful.
- It must not have been intended to be gratuitous.
- The person receiving the benefit must voluntarily accept it.
The leading authority is State of West Bengal v. B.K. Mondal & Sons, AIR 1962 SC 779. A contractor carried out construction work for the State, but no valid contract came into existence because the required formalities had not been satisfied. The State nevertheless accepted and used the benefit of the work. The Supreme Court held that the absence of a valid contract did not prevent a claim under Section 70.
Section 71 – Responsibility of a Finder of Goods
Section 71 deals with a person who finds goods belonging to another and takes them into their custody. The finder is subject to the same responsibility as a bailee in respect of the goods.
The finder must therefore take appropriate care of the goods and cannot treat them as their own merely because they have found them. The provision also recognises corresponding rights of the finder in relation to expenses incurred in preserving the goods.
The underlying principle is that finding another person’s property does not transfer ownership to the finder.
Section 72 – Money or Goods Received by Mistake or Coercion
Section 72 requires a person who has received money or goods by mistake or under coercion to repay the money or return the goods.
An important aspect of this provision is that “mistake” is not restricted to a mistake of fact. In Sales Tax Officer, Banaras v. Kanhaiya Lal Mukund Lal Saraf, AIR 1959 SC 135, the Supreme Court held that Section 72 covers mistakes of law as well as mistakes of fact. The case concerned sales tax paid under a provision that was subsequently declared unconstitutional. The Court held that the amount could be recovered because it had been paid under a mistake within the meaning of Section 72.
Common Examination Mistakes
A frequent mistake is confusing Sections 68 and 70. Section 68 specifically concerns necessaries supplied to a person incapable of contracting, whereas Section 70 concerns the voluntary acceptance of a benefit from a lawful, non-gratuitous act or delivery.
Another common error is assuming that Section 72 applies only to mistakes of fact. The Supreme Court’s decision in Kanhaiya Lal Saraf establishes that the provision also covers mistakes of law.
Finally, a quasi-contract should not be described as an ordinary contract. Its defining feature is that the obligation is created by law rather than by agreement between the parties.
Frequently Asked Questions
Is a quasi-contract a real contract?
No. A quasi-contract does not arise from an agreement between the parties. It is an obligation imposed by law in circumstances recognised under Sections 68 to 72.
Can a minor be personally liable under Section 68?
No. The claim for necessaries supplied to a person incapable of contracting is against that person’s property, rather than imposing personal contractual liability on them.
Does Section 72 apply to a mistake of law?
Yes. In Sales Tax Officer, Banaras v. Kanhaiya Lal Mukund Lal Saraf, the Supreme Court held that the expression “mistake” in Section 72 includes mistakes of law as well as mistakes of fact.
What are the three conditions for Section 70?
The act or delivery must be lawful, it must not have been intended to be gratuitous, and the person receiving the benefit must have voluntarily accepted it.
How many quasi-contractual obligations are recognised by the Indian Contract Act?
The Act recognises five categories under Sections 68, 69, 70, 71 and 72.
Conclusion
Quasi-contractual obligations under Sections 68 to 72 arise without a conventional agreement between the parties. Each provision addresses a distinct situation, ranging from necessaries supplied to persons incapable of contracting and payment of another’s legal obligation to non-gratuitous benefits, lost goods and payments made by mistake or coercion.
Understanding the specific requirements of each section is important because the five provisions operate in different factual situations and provide different forms of reimbursement or restitution.
References
- The Indian Contract Act, 1872, Sections 68–72.
- State of West Bengal v. B.K. Mondal & Sons, AIR 1962 SC 779.
- Sales Tax Officer, Banaras v. Kanhaiya Lal Mukund Lal Saraf, AIR 1959 SC 135.
- Nash v. Inman, [1908] 2 KB 1.
- Govindram Gordhandas Seksaria v. State of Gondal, Privy Council.
