Quasi-contracts

1. The basis: unjust enrichment

The classic statement is Lord Mansfield's in Moses v. Macferlan (1760): the defendant is obliged by the ties of natural justice and equity to refund money which, in the circumstances, he ought not to keep. In Fibrosa v. Fairbairn (1943) the House of Lords treated these claims as resting on unjust enrichment, distinct from contract and from tort. The Supreme Court adopted the same basis in Mahabir Kishore v. State of Madhya Pradesh, 1989 INSC 216, (1989) 4 SCC 1, explaining that the principle requires that the defendant has been enriched by receiving a benefit, that the enrichment is at the plaintiff's expense, and that its retention would be unjust.

Section 73, second paragraph, makes the same rules of compensation apply to a failure to discharge an obligation resembling one created by contract.

2. Section 68: necessaries supplied to a person incapable of contracting

If a person incapable of entering into a contract, or anyone whom he is legally bound to support, is supplied by another person with necessaries suited to his condition in life, the person who furnished the supplies is entitled to be reimbursed from the property of the incapable person. The illustrations:

• A supplies B, a lunatic, with necessaries suitable to his condition in life. A is entitled to be reimbursed from B's property.
• A supplies the wife and children of B, a lunatic, with necessaries suitable to their condition in life. A is entitled to be reimbursed from B's property.

Points to make. The section covers minors, persons of unsound mind and anyone else disqualified from contracting. “Necessaries” is relative to the person's station in life: food, clothing, lodging, education and medical care are the usual examples, and things that are luxuries for the person, or that he already has in sufficient supply, are not necessaries. The liability is limited to the incapable person's property. He is not personally liable, and if he has no property, nothing can be recovered.

3. Section 69: payment by an interested person

A person who is interested in the payment of money which another is bound by law to pay, and who therefore pays it, is entitled to be reimbursed by the other. The illustration: B holds land in Bengal on a lease granted by A, the zamindar. The revenue payable by A to the Government being in arrear, his land is advertised for sale, and under the revenue law the sale will annul B's lease. B, to prevent the sale, pays the Government the sum due from A. A is bound to make good to B the amount so paid.

Three conditions: the payer must be interested (he pays to protect his own interest, not as a volunteer); the other person must be bound by law to pay; and the payer must not himself be bound to pay it.

4. Section 70: non-gratuitous acts

Where a person lawfully does anything for another, or delivers anything to him, not intending to do so gratuitously, and the other person enjoys the benefit of it, the latter is bound to make compensation to the former, or to restore the thing done or delivered. The illustrations:

• A, a tradesman, leaves goods at B's house by mistake. B treats the goods as his own. He is bound to pay A for them.
• 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.

The leading case is State of West Bengal v. B.K. Mondal & Sons, 1961 INSC 333, AIR 1962 SC 779. A contractor built sheds, a kitchen and other structures for the State at the request of a government officer, but the contract did not satisfy Article 299 of the Constitution and so could not be enforced. The State used the structures. The Court held the State liable to pay under section 70, and stated the conditions:

• the thing must be done lawfully;
• the person doing it must not intend to act gratuitously; and
• the other person must enjoy the benefit, which implies that he had the choice to accept or reject the work and chose to accept it.

The Court added that section 70 does not depend on any contract, express or implied, so Article 299 does not bar the claim. The rule was followed in Mulamchand v. State of Madhya Pradesh, 1968 INSC 43, AIR 1968 SC 1218.

5. Section 71: the finder of goods

A person who finds goods belonging to another and takes them into his custody is subject to the same responsibility as a bailee. He must take as much care of them as a man of ordinary prudence would of his own goods (section 151), must try to find the owner, and must return them on demand.

His rights are set out in the chapter on bailment. Under section 168 he may retain the goods until he receives compensation for the trouble and expense he incurred in preserving them and finding the owner, though he cannot sue for such compensation; and he may sue for any reward the owner has offered. Under section 169, if the owner cannot with reasonable diligence be found, or refuses to pay the lawful charges, the finder may sell the goods if they are in danger of perishing or losing the greater part of their value, or if the lawful charges amount to two-thirds of their value.

6. Section 72: money paid by mistake or under coercion

A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it. The illustrations:

• A and B jointly owe Rs 100 to C. A alone pays the amount to C, and B, not knowing this, pays Rs 100 over again to C. C is bound to repay the amount to B.
• A railway company refuses to deliver goods to the consignee except on payment of an illegal charge for carriage. The consignee pays the sum charged to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive.

Mistake includes a mistake of law. In Sales Tax Officer, Banaras v. Kanhaiya Lal Mukundlal Saraf (1958, AIR 1959 SC 135), a firm paid sales tax on forward transactions in silver, believing it was payable. The levy was later held invalid by the Allahabad High Court. The Supreme Court held that the word “mistake” in section 72 has no qualification and covers mistakes of law as well as of fact; the firm could recover the tax. The State's argument that the money had been spent, or that the firm had been negligent, did not defeat the claim.

Coercion in section 72 is read in its ordinary sense and is not confined to the definition in section 15, which concerns consent to an agreement. Payment under protest to avoid seizure of goods, or under an illegal demand by a public authority, is covered. Under the Limitation Act, 1963, the period for recovery of money paid under mistake runs from the date the mistake is discovered (section 17(1)(c)), as Mahabir Kishore confirms.

7. Restitution and its limits

• The remedy is restitution of the benefit, not damages for loss of a bargain.
• A claim does not lie where there is a valid contract covering the same matter; the contract governs.
• In tax refund cases, the claimant who has passed the burden of the tax on to his customers may be refused a refund, because the refund would then enrich the claimant instead.
• Section 65 is related but distinct: it applies where there was an agreement that is discovered to be void or that becomes void.

8. Problem

X, a shopkeeper, supplies food grains and school uniforms to the wife and children of Y, a person of unsound mind, for six months. Y owns a house. Y's guardian refuses to pay, saying Y never contracted with X.

Issue. Whether X can recover the price of the goods, and from what.

Law. Section 68, and in particular its second illustration: a person who supplies necessaries suited to their condition in life to someone whom an incapable person is legally bound to support is entitled to reimbursement from the incapable person's property.

Application. Y lacks capacity under sections 11 and 12, so there is no contract. But Y is legally bound to maintain his wife and minor children. Food and school uniforms are necessaries for a family of ordinary means. X must show that the quantities and quality were suited to the family's condition in life and that the family was not already adequately supplied. The guardian's objection that there was no contract misses the point: section 68 does not depend on contract.

Conclusion. X is entitled to be reimbursed from Y's property, including the house, for the reasonable price of the necessaries. Y is not personally liable beyond his property.

How this is examined

As a 10-mark essay: “What are quasi-contracts? Explain the circumstances under which they arise”. Cover the unjust enrichment basis, then sections 68 to 72 with one illustration each and B.K. Mondal and Kanhaiya Lal. As a short note: section 70, the finder of goods, or money paid by mistake of law. The necessaries-to-a-lunatic's-family problem was set in January 2026 and is answered as above; section 70 problems involve goods left by mistake or work done for the Government without a valid contract.