Types of Quasi Contracts under the Indian Contract Act

Picture this: a shopkeeper sells groceries on credit to a mentally unstable customer, a tenant pays land revenue to save his lease when his landlord defaults, or someone finds a lost mobile phone and spends money keeping it safe until the owner is traced. None of these situations involve a signed agreement, yet the law still expects money to change hands fairly. This is where quasi contracts step in. Under the Indian Contract Act, 1872, Sections 68 to 72 recognize five distinct situations where the law creates an obligation to pay, even though no real contract ever existed between the parties.

What exactly is a quasi contract? 🔗

A quasi contract is not a contract in the traditional sense. There is no offer, no acceptance, and often no intention to create a legal relationship. Instead, courts impose these obligations to prevent one party from being unjustly enriched at another’s expense. The Indian Contract Act does not use the term “quasi contract” directly; instead, Chapter V is titled “Of certain relations resembling those created by contract,” and this is where the law borrows the logic of contracts to deliver a fair outcome in situations contracts don’t normally cover.

The core idea is simple: if someone benefits from another person’s money, goods, or effort without a proper agreement, the law steps in to balance the scales. This principle of unjust enrichment runs through all five types recognized under Sections 68 to 72 of the Act.

The five types of quasi contracts 🔗

Each of these five sections deals with a distinct fact pattern. Understanding them individually makes it much easier to spot a quasi contract in a case study or exam question.

1. Supply of necessaries to incapable persons (Section 68) 🔗

Minors and persons of unsound mind cannot enter into valid contracts. This protects them from being exploited, but it also creates a practical problem: what happens when someone genuinely needs food, clothing, shelter, or medical care and has no one else to turn to? Section 68 solves this by allowing a supplier of necessaries to recover the cost, not from the incapable person personally, but from that person’s property or estate.

The section also extends to dependents. If someone supplies necessaries to the spouse or children of a person who is legally bound to support them but is incapable of contracting, the supplier can still claim reimbursement from that incapable person’s property, as explained in the illustrations attached to Section 68.

What counts as “necessaries” is not fixed by the Act. Courts look at what suits the person’s actual condition and standard of living. In Jagon Ram Marwari v. Mahadeo Prosad Sahu, the Calcutta High Court held that necessaries mean goods appropriate to the minor’s social status, not luxuries. Indian courts have also drawn on the English case Nash v. Inman, where a tailor could not recover payment for clothes supplied to a minor because the minor already owned sufficient clothing of that kind, meaning the items were not genuinely necessary at that point. This distinction matters for a shopkeeper or lender in India today. Supplying school fees or medical treatment to a minor is safely recoverable; supplying a designer wardrobe to a minor who already has enough clothes is not, as outlined in this analysis of Section 68’s judicial interpretation.

2. Reimbursement of a person interested in payment (Section 70… wait, Section 69) 🔗

Section 69 covers situations where one person is legally bound to pay money, but someone else, who has a genuine interest in that payment being made, ends up paying it instead. That second person can recover the amount from the person who was originally liable.

The classic illustration involves a tenant and a landlord. If a landlord fails to pay government land revenue and the tenant’s leasehold interest is at risk of being wiped out by a forced sale, the tenant can pay the revenue himself to protect his lease. He is then entitled to recover that amount from the landlord, since the landlord was legally bound to pay it. This example appears consistently across legal commentary on Section 69 of the Contract Act.

Courts have clarified that the person claiming reimbursement must have had a genuine interest in making the payment, not just a general concern. Someone with no stake in the outcome cannot pay another’s debt and then demand reimbursement under this section.

3. Obligation to pay for non-gratuitous acts (Section 70) 🔗

Section 70 applies when one person lawfully does something for another, or delivers something to another, without intending it as a free gift, and the other person voluntarily accepts and enjoys the benefit. In such cases, the beneficiary must either compensate for the act or return what was delivered.

Three conditions must be satisfied for this section to apply: the act must be lawful, it must not be intended as gratuitous, and the other party must have had the choice to accept or reject the benefit and chosen to accept it. This last point matters enormously. If a benefit is forced on someone without any real opportunity to refuse it, Section 70 does not apply, because forcing liability onto an unwilling recipient would defeat the very fairness the section is meant to protect.

A well-known illustration involves government works that indirectly benefit private landowners, such as an irrigation tank being renovated by the state. If the improved water supply benefits neighbouring landowners who knowingly accept the advantage, they may be required to contribute toward the cost, since they enjoyed a non-gratuitous benefit. Courts have also applied this provision to contractors whose work was accepted by the other party, even when the underlying oral agreement could not be proved, as seen in cases discussed under Section 70’s judicial history.

4. Responsibility of a finder of goods (Section 71) 🔗

Losing a phone, a wallet, or a bag on a train is common enough in daily life, and the law has specific rules for whoever finds it. Section 71 treats a finder of goods as having the same responsibilities as a bailee, meaning the finder must take reasonable care of the property, much like a prudent person would care for their own belongings.

This creates a set of clear duties and rights for the finder:

This section becomes especially relevant with high-value lost items like laptops or jewellery, where the finder’s honest handling of the situation, and the costs incurred while safekeeping the item, can later be claimed back from the owner.

5. Liability for money paid or goods delivered by mistake or coercion (Section 72) 🔗

The last of the five types deals with payments or deliveries made by mistake or under coercion. Section 72 states that anyone who receives money or property this way must return it or repay it, regardless of how honest or careless the mistake was.

An important feature of this section is that it does not distinguish between a mistake of fact and a mistake of law. This has real consequences for tax disputes. In Sales Tax Officer, Banaras v. Kanhaiya Lal, sales tax was paid on a bullion transaction under a law that was later declared invalid by the courts. Since the tax was collected under a legal provision that turned out to be unconstitutional, the payer was allowed to recover the amount under Section 72, as detailed in this discussion of quasi-contractual remedies for mistaken payments. A similar outcome occurred in a dispute where a municipal corporation had collected water taxes later found to be invalid; the corporation was directed to repay the amount collected.

For coercion, the logic is the same. If money or goods are handed over under threat, duress, or improper pressure, the person who received them cannot keep the benefit simply because a transaction technically took place.

Why these five sections matter beyond the exam 🔗

Quasi contracts are easy to dismiss as a niche topic, but they shape everyday transactions in India far more than most people realise. A pharmacist extending credit to a minor for medicines, a co-owner paying off a jointly owed loan, a courier company holding onto a misdelivered parcel, or a tax authority forced to refund an invalid levy, all of these fall squarely within Sections 68 to 72. The underlying thread connecting all five situations is the principle that no one should profit unfairly at another’s cost, and the law is willing to construct an artificial contract to enforce that fairness where no real one exists.

It also helps to remember what quasi contracts are not. They do not depend on the intention of the parties, they cannot be enforced against the whole world (only against a specific person who received the benefit), and they typically result in an obligation to pay a fixed or ascertainable sum rather than open-ended damages. This distinguishes them clearly from both valid contracts and general tort claims.

What do you think? If a friend pays your electricity bill by mistake instead of their own, does that feel more like a moral obligation to repay them, or a legal one under Section 72? And should the “necessaries” a minor can claim reimbursement for look different in a digital-first India, where a laptop or internet access might now be as essential as food or clothing once was?

References

1. https://www.drishtijudiciary.com/ttp-indian-contract-act/quasi-contracts
2. https://ibclaw.in/section-68-of-indian-contract-act-1872-claim-for-necessaries-supplied-to-person-incapable-of-contracting-or-on-his-account/
3. https://www.privatelawreview.com/post/section-68-of-the-indian-contract-act-minor-s-liability-for-necessary-goods
4. https://www.casemine.com/search/in/indian+contract+act+section+69
5. https://thelegalschool.in/blog/section-70-indian-contract-act
6. https://lexforti.com/legal-news/quasi-contracts-under-the-indian-contract-act/