Report No. 13
17. Quasi-contracts.-
Another major topic which has received our particular attention and which deserves to be mentioned at this stage is the subject of quasi-contract, as it is commonly known.
This subject is dealt with in Chapter V of our Act under the head-'certain relations resembling those created by contract'. We prefer to retain the present title of the chapter because it is more descriptive and comprehensive than some other expressions which are also used to indicate relations of this nature, for instance, 'Quasi-Contracts', 'Contracts implied in Law' and 'Constructive Contracts'. This chapter, however, makes an inadequate provision for the obligations resembling those created by contract. While referring to this subject, Lord Wright observed that the Indian Contract Act dealt with it in a very unsatisfactory manner.1 With this observation we are in agreement and propose to make exhaustive provisions for such obligations and suggest that the Chapter be made more comprehensive.
1. Lord Wright Legal Essays & Addresses, p. 53.
18. The best theoretical basis of Quasi-Contract is the principle of 'unjust enrichment' or as Professor Winfield would prefer to call it, 'unjust benefit'. This is derived from the old maxim of Roman Law: 'Nemo debet locupletari ex aliena jactura. No man should grow rich out of another person's loss. In Fibrosa v. Fairbairn, 1943 AC 32 (61). Lord Wright said:
"any civilised system of law is bound to provide remedies for cases of what has been called unjust enrichment or unjust benefit, that is, to prevent a man from retaining the money of, or some benefit derived from, another which it is against conscience that he should keep. Such remedies in English Law are generally different from remedies in contract or in tort, and are now recognised to fall within a third category of the common law which has been called quasi-contract or restitution.
Denning L.J. (as he then was), is another exponent of the doctrine. In Brewer Street Investments Ltd. v. Barclays Woolen Co. Ltd., (1954) 1 QB 428 (436). he said:
"The proper way to formulate the claim is on a request implied in law or, as I would prefer to put it, on a claim for restitution."
Underlying the law of restitution is the conception that no one should unjustly enrich himself at the expense of his neighbour. "The conception of restitution is the prevention of unjust enrichment.1"
It may be noted, however, that as to the precise position of this doctrine in England there does not seem to be so far a general agreement. Lord Porter, for example, observed:
"The exact status of the law of unjust enrichment is not yet assured.2"
According to Professor Glanville Williams this branch of the law in England is defective.3 In the U.S.A., the law of restitution has received more adequate treatment as is apparent from the fact that the American Restatement of the Law has devoted more than two hundred sections to the discussion of the principles relating to the subject. In India, whenever a case arose which was not directly covered by any specific provision of the Contract Act, assistance was freely derived by our Judges from the English and American decisions.
1. Sir Alfred Denning Changing Law, p. 655.
2. Reading v. Att. General, 1951 AC 507 (513).
3. Law Reform and Law Making, p. 71.
19. Situation which attract the application of the law of restitution are so numerous that the categories of quasi-contracts cannot be said to be yet closed. The difficulty of an exhaustive statement of principles and of reducing them to formulas which can be incorporated in a legislative enactment is obvious. To enumerate the various principles which create obligations of this type, as has been done in the American Restatement of the law, is not the work of a legislator. To compress what is contained therein is an impossible task. We recommend that the doctrine of unjust enrichment should be accepted and after making specific provision for well-known cases of unjust enrichment a separate residuary section1 should be enacted which will cover cases not specifically provided for.
1. Vide section 72B, App I.
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