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Sunday, November 23, 2014

Indian Contract Act: Contingent Contract and Quasi Contract

Contingent Contract
A ‘contingent contract’ is a contract, to do or not to do something If some event, collateral to such contract does or does not happen. For example:
Ø  A contract to pay B Rs.10, 000 if B house is burnt.
Ø  A promise to pay B Rs.1, 00,000 if a certain, ship does not return within a year.

Essential features of a contingent contract:
a) It is a contract to do or not to do something
b) Dependent on happening or non happening of an event
c) Such an event is a collateral event (i.e. it is collateral) to the contract i.e. the event must not depend upon the mere will of party.
d) The event is uncertain.

Enforcement of Contingent Contract:

a)      Enforcement of contract contingent on an event 'happening' (Section 32) If that event becomes impossible, such contracts become void.

b)      Enforcement of contracts contingent on an event 'not-happening' (Section 33) Such contract is enforceable only when the happening of that event becomes impossible and not before.

c)       When shall an event on which contract is contingent be deemed impossible, if it is the future conduct of a living person (Section 34). It will be deemed impossible when such person does anything which renders it impossible that he should so act within any definite time or otherwise than under further contingencies.

d)      Agreement contingent on impossible event (Sec. 36) is void whether the impossibility of the event may be or may not be known to the parties to the agreement at the time when they entered into it.

Quasi Contract
It means a contract which lacks one or more of the essentials of a contract. In a contract, a promisor voluntarily undertakes an obligation in favour of the promisee. When a similar obligation is imposed by law upon a person for the benefit of another even in the absence of a contract. Such contracts are the quasi-contracts. Quasi contract are declared by law as valid contracts on the basis of principles of equity i.e. no person shall be allowed to enrich himself at the expense of another the legal obligations of parties remains same.

Nature of Quasi contracts:
a) A quasi contract does not arise from any formal agreement but is imposed by law.
b) Every quasi contract based upon the principle of equity and good conscience.
c) A quasi contract is always a right to money and generally though not always to a liquidated sum of money.
d) A suit for its breach may be filed in the same way as in case of a complete contract.
e) The right grouted to a party under a quasi contract is not available to him against the whole world but against particular person(s) only.
f) A suit for breach of a quasi contract may be filed in the same way as in case of an ordinary contract
g) Although there is no contract between the parties under a quasi contracts, yet they are put in the same position as if he were a contract between them.

Types of Quasi Contracts
a) Claim for necessaries supplied to persons incapable of contracting (Sec. 68): 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 has furnished such supplies is entitled to be reimbursed from the property of such incapable person.
b) Right to recover money paid for another person (Section 69): A person who has paid a sum of money which another is obliged to pay, is entitled to be reimbursed by that other person provided the payment has been made by him to protect his own interest.
c) Obligation of a person enjoying benefits of non-gratuitous act (Section 70): Where, a person does some act or delivers something lawfully to another person with the intention of receiving payments for the same, in such a case, the other person is bound to make payment if he accepts such services or goods or enjoys their benefit.
d) Responsibility of a finder of goods (Sec.71): A person who finds goods belonging to another and takes them into his custody is subject to the same responsibility as a bailee. Therefore, he is required:
Ø  to take proper care of the thing found as his own goods
Ø  not to appropriate it to his own use,
Ø  to restore it to the owner when the owner is traced.
Right of finder
Ø  Finder is entitled to retain it against whole world.
Ø  Finder has lien for express incurred in preserving goods & finding true owner.
Ø  However he cannot file suit for recovery of this money.
Ø  It he can claim recovered. If it was offered.
Ø  If true owners refuses to pay lawful charge he May Sale.
a)      When goods are of perishable nature.
b)      When lawful charge amount to two third of its values or more.
e) Liability for money paid or thing delivered by mistake or under coercion (Sec. 72): A person to whom money has been paid, or anything delivered, by mistake or under coercion must repay or return it.

In each of the above cases, contractual liability is the creation of law and does not depend upon any mutual agreement between the parties.