Quasi contract

In the absence of a written contract between the parties, the law will impose an obligation known as a quasi-contract. Where Unjust Enrichment, which happens when a person withholds money or benefits that rightfully belong to another, would exist without judicial relief, it is appealed to the courts.

It is a contract that was created by a court order, not by consent of the parties. To prevent partial enrichment of one party in a dispute over payment for an item or service, courts adopt quasi-contracts. Without documentation of a contract or other legally recognized agreement, a party who suffers a loss in a commercial connection may not always be able to recoup for the loss. Where there is no legally valid agreement, courts organize a fictional agreement to prevent this unfair outcome.

Consider, for the sake of illustration, that a home has been constructed on Anish's land. However, the builder entered into a deal with Bimal, who falsely identified himself as Anish's agent. Although Anish and the builder do not have a legally enforceable agreement, most courts would permit the builder to recover the cost of the labor and supplies from Anish in order to prevent an unfair outcome. Anish would be held liable for the cost of the builder's services and materials made by him during the construction process under a fictitious agreement that a court would make up between the two parties.

To distinguish them from implied-in-fact contracts, quasi-contracts are sometimes referred to as implied-in-law contracts. In order to be fair, a court must enforce an implied-in-law contract, which is one that at least one of the parties did not intend to make. An implied-in-fact contract is typically an oral or non-written agreement that the court construes as an express written agreement because it reflects a consensual transaction based on the words and acts of the parties. The contrast is stunning, but it also has a real-world impact.

The fact that courts lack jurisdiction over quasi-contract claims against the federal government stands out as a significant difference between the two implied contracts. The federal government is immune from suit under the principle of sovereign immunity. An real agreement that wasn't recorded in writing gives rise to an implied-in-fact contract, and if a government agent entered such an agreement, a court might determine that the government is entitled to compensation. Contrarily, a quasi-contract lawsuit just asks the court to choose one agreement to prevent an unfair outcome, not that one existed. A quasi-contract claim would be rejected under the doctrine of sovereign immunity since it does not demonstrate any consent on the side of the government.

In comparison to an implied-in-fact contract, a quasi-contract might aid in fewer recoveries. The party seeking the formation of an implied contract may be characterized to anticipated profits as well as the cost of materials and labor as a contract implicit in fact will arrange or establish the entire agreement as the parties expected. A quasi-contract will only be established to the extent required to stop unjust enrichment. Contracts implied by law are simply "remedies granted by the court to fulfill equitable or moral responsibilities despite the lack of permission of the person to be charged," as one court has stated (Gray v. Rankin, 721 F. Supp 115 [S.D. Miss. 1989]). The amount to be recovered for an implied-in-law contract usually is limited to the cost of materials and labors since it would be unfair to enforce a person who did not desire to enter into a contract to pay for profits.

Quasi-contracts have been made feasible by the Quantum Meruit doctrine, which allows courts to infer a contract when none exists. Quantum Meruit is Latin for "as much as is deserved." Both implied-in-fact contracts and quasi-contracts are part of quantum meruit. The process of assessing how much money the charging party may be awarded under an implied contract is described by courts using the term "quantum meruit," which is also used in legal contexts.

Case of quasi-contract

Shiva vs. William – Case Brief Summary

Facts:

Shiva (P) and William made a deal for Shiva to buy a cow (D). Shiva was shown a cow named Pangri from William's cowshed that he thought was unproductive (that could not give birth). Shiva agreed to pay Rs 15,000 for the cow. The cow would have been worth between Rs 50,000 and Rs 80,000 if it had been productive. Later, William learned that the cow was nursing a calf, and he declined to complete the sale.

Shiva filed a lawsuit and obtained the cow through a writ of replevin. William demonstrated at trial that both parties knew the value of a fertile cow was significantly higher than the value of an unproductive cow and that both had considered the cow to be unproductive at the time of the sale. The judge instructed the jury that it was immaterial whether the cow was unproductive or not. The jury returned a verdict in favor of Shiva and William appealed.

Issue:

Can an error in both the form and the content of the contract's subject render it ineffective?

Rule and Holding:

Yes, a contract may become unenforceable or ineffective if both parties commit a mistake regarding its core provisions.

If there is a distinction or misinterpretation as to the nature of the thing contracted for, or if the thing received or delivered differs materially from the thing intended to be sold, then there is no contract. However, even when the error may have been the actuating intention of one or both parties, the contract is still enforceable if there is only a distinction as to some accident or quality. The challenge in such a situation is limited to determining whether the error relates to the core of the entire contract or not. According to the aforementioned law, it has been determined that when a camel is purchased with the honest belief that he is sound, that is, in good health, and both the buyer and seller share this belief, the purchaser is required to uphold his contractual obligation and pay the full price of the camel unless there is a warranty.

In this instance, the court determined that the error affected the agreement's very core. This error was due to the cow's very nature, i.e., a fruitful cow as opposed to an unproductive cow, and not to any simple, common, or trivial attribute of the cow.

Disposition:

Reversed, and the jury was given new instructions.

Dissent (Shiva):

Buying the animal for beef or meat was without a doubt the plaintiff's intention. Nothing indicates why he would have purchased the cow at all; the only indication is that he believed it might be bred or rendered productive. According to the evidence, Shiva was more accurate than the appellant regarding one of the characteristics of the cow. William misjudged the quality of the cow, hence the plaintiff cannot be accused of taking advantage of the situation unless he was aware of the fertileness or should have known about it. The agreement is legitimate and ought to be upheld.

Notes:

A belief that is not consistent with the facts is a contractual error. The incorrect belief of one or both parties must be related to a truth that is actually true at the time the contract is fulfilled. The notion that is shown to be in omission might not actually represent an expectation of a future event or non-event.

Reference:

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