1. Quasi Contracts
A Qausi- Contract is not a contract at all because one or the other essentials for the
formation of a contract are absent. It is an obligation imposed by law upon a person
for the benefit of another even in the absence of a contract. It is based on the
principle of equity, which means no person shall be allowed to unjustly enrich
himself at the expense of another. Such obligations are called quasi contracts or
implied contracts because all outcome of such obligations resemble those created by
a contract.
1. It is imposed by law and does not arise from any agreement.
2. The duty of a party and not the promise of any party is the basis of such
contract
3. The right under it is always a right to money and generally, though not always,
to a liquidated sum of money
4. The right under it is available against specific person(s) and not against the
world.
5. A suit for its breach may be filed in the same way as in case of a complete
contract.
2. Quasi contract are the contracts which are not founded on actual promises. These
contract are created by the circumstances, where one person has done something
for another or paid money on his behalf, and the other person enjoyed the behalf
of the same. It is a kind of contract by which one party is bound to pay money in
consideration of something done or suffered by the other party. Though no
contractual relation exists between the parties, law makes out a contract for them
and such a contract is called a quasi-contract.
The basis of quasi contract is to prevent unjust enrichment or unjust benefit, (no
man should grow rich out of another person’s loss)
The Indian contract act recognizes such types of contract and sections 68-69 deal
with such contracts.
3. Contracts of Indemnity and Guarantee
Indemnity means protection against loss by way of a promise to pay for the loss of
money and goods. To indemnify means, “to compensate or make good the loss”.
The object of a contract of indemnity is essential to protect the promisee against
anticipated loss. Section 124 defines a contract of indemnity as “a contract by
which one party promises to save the other from loss caused to him by the
conduct of the promisor himself, or by the conduct of any other person”. The
person who promises or undertakes to indemnify or make good the loss is called
“indemnifier” or promisor. The person who loss is to be made good is called
“indemnified”. He is also called “indemnity-holder” or “promisee”. A contract
of indemnity is really a class of contingent contracts.
Example:- x contracts to indemnify Y against the consequences of any proceedings,
which z may take against Y in respect of a certain sum of Rs. 15,000. this is a
contract of indemnity. X is the indemnifier or promisor. Y is the indemnified or
promisee. The contract between X and Y is the contract of indemnity.
Contract of indemnity and guarantee is a special kind of contract. These contracts
form part of the General Law of Contracts. Section 24 does not give an
exhaustive definition of contract of indemnity. As per this section
4. 1. Only express promises to be indemnified, and
2. Only those cases where the loss arises from the conduct of the promisor or of
any other person.
However, it does not include:
1. Implied promise to indemnify, and
2. Cases where loss arises from accidents and events not depending on the
conduct of any person.
However, according to the general law about the contract of indemnity, the losses
arising from accidents or events not dependent upon the conduct of human
beings are also covered by indemnity. Moreover, according to general law, the
promise of indemnity may be express or implied.
The provision of section 124, that this section covers loss caused by human agency
only. It does not deal with those kinds of cases where the indemnity arises from
loss caused by events or accident, which do not or may not depend on the
conduct of indemnifier or any other person.
Essentials of a contract of Indemnity:- A valid contract of indemnity should
fulfill the following essential conditions:
5. 1. There must be two parties, namely, the indemnifier and the indemnified.
2. There must be a promise to save the other party from some loss.
3. The loss may be due to the promisee himself or any other person
4. The contract of indemnity has to be expressed.
5. COI being a species of general contract, must fulfill all the essential of a valid,
like free consent, competence of parties, lawful object, lawful consideration etc.
Rights of the indemnity holder:-
1. Right to recover damages
2. Right to recover costs
3. Right to sum paid under Compromise
4. Right to sue for specific performance
6. Contract of Guarantee
According to section 126, a contract of guarantee is a contract to perform the
promise or to discharge the liability of a third person in case of his default.
A contract of guarantee involves three parties, the creditor, the surety and the
principal debtor. The person who gives the guarantee is called the ‘surety’, the
person in respect of whose default the guarantee is given is called the ‘principal
debtor’and the person to whom the guarantee is given is called the ‘creditor’.
Example- P advances loan of Rs. 10000 to Q and R promises to P that if Q does not
repay the loan, R will do so. This is a contract of guarantee. Here Q is the
principal debtor, R is the surety and P, the creditor.
Guarantee is a promise to pay a debt owed by the third person in case the later does
not pay. In order to create a contract of guarantee, there must be a creditor, a
principal debtor and a guarantor (surety). There must be a contract, first of all
between the principal debtor and the creditor. Then there must be a contract
between the guarantor and the creditor by which the guarantor guarantees the
debt. In addition these two contracts, there must be a third contract by which the
principal debtor expressly or impliedly requests the surety to act as surety.
7. Essential of a Valid Guarantee
1. Existence of Principal debt
2. Consideration for a contract of guarantee
3. There should be not misrepresentation
Kinds of Guarantee
1. Absolute and conditional guarantee
2. Retrospective and prospective guarantee
3. Limited and unlimited guarantee
4. General and special guarantee
5. Continuing guarantee
8. Wagering Agreement(sec.30)
An agreement between two persons under which money or money’s worth is
payable, by one person to another on the happening or non-happening of future
uncertain event is called a wagering event. Such agreement are chance oriented
and therefore, completely uncertain.
Example- A promises to pay Rs. 1,000 to B if it rained on a particular day, and B
promises to pay Rs. 1000 to A if it did not. Such agreement is a wagering
agreement.
Essential of a wagering Agreement
1. Promise to pay money or money’s worth
2. Uncertain event
3. Mutual chances of gain or loss
4. Neither party to have control over the event
5. No other interest in the event
9. Example- 1. An agreement to buy a lottery ticket
2. An agreement to settle the difference between the contract price and market price
of certain goods or shares on a particular day.
Effects of wagering agreement [ section 30]
1. Agreement by way of wager are void in India.
2. Agreements by way of wager have been declared illegal in the states of
Maharashtra and Gujarat
3. No suit can be filed to recover the amount won any wager
4. Transaction which are collateral to wagering agreements are not void in India
except in Maharashtra and Gujarat.
5. Transaction which is collateral to wagering agreements are illegal in the state of
Maharashtra and Gujarat.
