Quasi Contracts - Business Law

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  • The case of NASH v INMAN (1908) 2 KB 1 March 5 1908 http://www.hinduonnet.com/businessline/2000/06/26/stories/212601ak.htm
  • Duties of Finder of Goods: He must try to find out “the real owner” of the goods and must not appropriate the property to his own use ( Section 403 IPC ) He must take as much care of the goods as much a man of ordinary prudence would take of his own goods of same bulk, quality and value. (Sec 151 ) Rights of finder of Goods: He is entitled to the possession of the goods till the true owner is found. ( Case : Hollins vs FowlerS) He is entitled to retain this good until he receives the lawful charges or compensation for retaining the goods and for care and preservation thereof. However, he cant sue for such compensation unless a specified reward has been advertised by the owner. He can sell the goods if: The commodity is perishable the owner cannot be found owner refuses to pay the lawful charges Lawful charges amount to 2/3rd of the value of commodity found
  • Duties of Finder of Goods: He must try to find out “the real owner” of the goods and must not appropriate the property to his own use ( Section 403 IPC ) He must take as much care of the goods as much a man of ordinary prudence would take of his own goods of same bulk, quality and value. (Sec 151 ) Rights of finder of Goods: He is entitled to the possession of the goods till the true owner is found. ( Case : Hollins vs FowlerS) He is entitled to retain this good until he receives the lawful charges or compensation for retaining the goods and for care and preservation thereof. However, he cant sue for such compensation unless a specified reward has been advertised by the owner. He can sell the goods if: The commodity is perishable the owner cannot be found owner refuses to pay the lawful charges Lawful charges amount to 2/3rd of the value of commodity found
  • Notice that the term mistake as used in Section 72 includes not only a mistake of fact but also a mistake of law. There is no conflict between the provisions of Section 72 on the one hand, and Sections 21 and 22 on the other, and the true principle is that if one party under mistake, whether of fact or law, pays to another party money which is not due by contract or otherwise, that money must be repaid [ Sales Tax Officer, Benares v. Kanhaiyalal Makanlal Saraf, (1959), S.C.J. 53].
  • Quasi Contracts - Business Law

    1. 1. QUASI CONTRACTS Group 9 Abhishek Dwivedi PGPM508_09 Ajit Kumar PGPM508_20 Gautam Pradhan PGPM508_32 Gagan Seth PGPM508_44 Chandra M Verma PGPM508_56
    2. 2. What Are Quasi Contracts <ul><li>‘ Quasi’ means ‘almost’ or ‘apparently but not really’ or ‘as if it were’ </li></ul><ul><li>A quasi contract is a contract that exists by order of a court, not by agreement of the parties </li></ul><ul><li>Courts create quasi contracts to avoid the unjust enrichment of a party in a dispute over payment for a good or service </li></ul><ul><li>Sections 68 to 72 deals with &quot;certain relations resembling those created by contract&quot; under Indian contract act, 1872 </li></ul>
    3. 3. Illustration <ul><li>A victim slips on a banana leaf and falls down a flight stairs </li></ul><ul><li>Doctor a stranger who happened to be walking by , administers emergency treatment to unconscious victim </li></ul><ul><li>Doctor does not enter into a contract with victim </li></ul><ul><li>Doctor could now recover fee for her services on the theory of unjust enrichment </li></ul><ul><li>This is where “Quasi-contract” come into play. The court in this case creates a fictional contract to grant benefits to the doctor </li></ul>
    4. 4. Sections In Law <ul><li>The sections in law which cover the Quasi Contracts are </li></ul><ul><li>Supply of necessaries (section 68) </li></ul><ul><li>Payment of lawful dues by interested person (section 69) </li></ul><ul><li>Person enjoying benefit of a gratuitous act (section 70) </li></ul><ul><li>Finder of goods (section 71) </li></ul><ul><li>Goods or anything delivered by mistake or coercion (section 72) </li></ul>
    5. 5. Quasi Contract Contract Differences… Contracts results from the will of the parties expressed with a view to create an obligation <ul><li>Quasi Contract is not a contract at all but merely a legal fiction. </li></ul><ul><li>It cannot be used when full-fledged contract exists </li></ul>Contract is an agreement There is no agreement It has certain essential elements Essentials for formation of a contract are absent It is a full fledged contract and is binding It is not a full fledged contract
    6. 6. Section 68 <ul><li>“ Claim for supply of necessaries to person incapable of contracting ” </li></ul><ul><li>Necessaries: </li></ul><ul><li>Things suited to the conditions of incompetent parties </li></ul><ul><li>Includes articles required to maintain a particular person in the state and degree in the life in which he is </li></ul><ul><li>Articles without which an individual cannot reasonable exist </li></ul>Illustration <ul><li>A supplies B , lunatic with necessaries suitable to his condition of life. is entitled to be reimbursed from B ’s property </li></ul><ul><li>A minor studying at Cambridge was supplied with clothing, including eleven waist-wats. He already had sufficient clothing with him. It was held that the waist-wats were not necessary articles and so he was not liable to pay for them. </li></ul>
    7. 7. Section 69 <ul><li>“ Reimbursement of money paid, in which he is interested ” </li></ul><ul><li>Essentials: </li></ul><ul><li>There must be a person who is bound to make a payment by law. The person paying must himself not be bound to pay. When he is jointly liable to pay, payment by him would not give him the right to recover under this section </li></ul><ul><li>There must be another person interested, not bound by law, in such payment being made and interest should exist at the time of payment. </li></ul><ul><li>The payment must be made bonafide for the protection of one’s own interest </li></ul>Illustration A and B have been fined jointly Rs500 for selling adulterated ghee. A alone pays the amount of fine in good faith, A cannot later claim contribution from B under Section 69. Notice that although B was bound by law to pay and A has paid B’s share in good faith, yet A cannot recover as he himself was bound to make the payment, being jointly liable with B and was not simply interested in making the payment. [A can, however, claim contribution form B under Section 43.]
    8. 8. Section 70 <ul><li>“ Obligation of a person enjoying benefits of non-gratuitous act ” </li></ul><ul><li>Person lawfully does anything for another person </li></ul><ul><li>Delivers anything to him non-gratuitously </li></ul><ul><li>Latter is bound to make compensation or restore the thing so done or delivered </li></ul><ul><li>The thing must be done lawfully </li></ul><ul><li>The person for whom the act is done must enjoy the benefit of it. </li></ul><ul><li>A , a tradesman, leaves goods at B’s house by mistake. B treats the goods his own. He is bound to pay for them </li></ul><ul><li>A saves B’s property from fire. A is not entitled to compensation from B , if the circumstances show that he intended to act gratuitously. </li></ul>Illustration
    9. 9. Section 71 - Responsibility of finder of goods <ul><li>“ A person who finds goods belonging to another and takes them into his custody, is subject to the same responsibility as a bailee. The finder’s position, therefore, has been considered along with bailment ” </li></ul><ul><li>H picked up a diamond on the floor of F’s shop and handed it over to F to keep it till the owner appeared </li></ul><ul><li>True owner could not be searched </li></ul><ul><li>After the lapse of some weeks, H tendered to F the lawful expenses incurred by him for finding the true owner and an indemnity bond and requested him to return the diamond to him (i.e., H ). F refused to do so </li></ul><ul><li>F must return the diamond to H as he was entitled to retain the goods as against everybody except the true owner (Hollins Vs FowlerS) </li></ul>Illustration
    10. 10. Section 71 - Responsibility of finder of goods <ul><li>Duties of Finder of Goods: </li></ul><ul><ul><li>He must try to find out “the real owner” of the goods and must not appropriate the property to his own use ( Section 403 IPC ) </li></ul></ul><ul><ul><li>He must take as much care of the goods as much a man of ordinary prudence would take of his own goods of same bulk, quality and value. (Sec 151 ) </li></ul></ul><ul><li>Rights of finder of Goods: </li></ul><ul><ul><li>He is entitled to the possession of the goods till the true owner is found. </li></ul></ul><ul><ul><li>( Case : Hollins vs FowlerS) </li></ul></ul><ul><ul><li>He is entitled to retain this good until he receives the lawful charges or compensation for retaining the goods and for care and preservation thereof. However, he cant sue for such compensation unless a specified reward has been advertised by the owner. </li></ul></ul><ul><ul><li>He can sell the goods if: </li></ul></ul><ul><ul><ul><ul><li>The commodity is perishable </li></ul></ul></ul></ul><ul><ul><ul><ul><li>The owner cannot be found </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Owner refuses to pay the lawful charges </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Lawful charges amount to 2/3 rd of the value of commodity found </li></ul></ul></ul></ul>
    11. 11. Section 72 - delivered by mistake or coercion <ul><li>“ Liability of person to whom money is paid, or thing delivered by mistake or under coercion ” </li></ul><ul><li>What does it mean… </li></ul><ul><li>A person to whom money has been paid, or anything delivered by mistake or under </li></ul><ul><li>A and B jointly owe Rs. 1,000 to C . A alone pays the amount to C and B not knowing this fact, pays Rs. 1,000 over again to C . C is bound to repay the amount to B . </li></ul><ul><li>A railway company refuses to deliver certain goods to the consignee except upon the payment of an illegal charge for carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive. </li></ul>Illustration

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