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Contingent and Quasi Contracts
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Meaning of Contingent Contract:
When the performance of a contract is notimmediately due but it becomes so only after
the happening or non-happening of somecontingency (i.e., some uncertain event) it is
known as Contingent Contract.
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Characteristics of Contingent Contract
There are three essential
Its performance depends upon the uncertainty of happening
or non-happening in future of some event. It is thisdependence on a future which distinguishes a contingentcontract from other contracts.
The event must be collateral, i.e., incidental to the contract.
The contingent event should not be mere will of thePromisor.
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Rules Regarding Performance of Contingent
Contracts
Examples (1) A makes a contract with B to buy B's horse if A survives C.
This contract cannot be enforced by law unless and until C dies
in A's life time.
(2) A makes a contract with B to sell a horse to B at a specified
price, if C to whom the horse has been offered, refuses to buy
him. The contract cannot be enforced by law unless and until C
refuses to buy the horse.
(3) A contracts to pay B a sum of money when B marries C, C
dies without being married to B. The contract become void.
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Rules Regarding Performance
of Contingent Contracts The Happening of an Event within Fixed Time
"Contingent contracts to do or not to do anythingif a specified uncertain event happens within a
fixed time become void if at the expiration of the
time fixed, such event has not happened, or if,
before the time fixed such event becomes
impossible".
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Rules Regarding Performance
of Contingent Contracts The Non-happening of an Event within a Fixed Time
"Contingent contracts to do or not to do anythingif a specified uncertain event does not happenwithin a fixed time may be enforced by law when
the time fixed has expired and such event has not
happened, or, before the time fixed has expired, ifit becomes certain that such event will not
happen".
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Rules Regarding Performance of Contingent
Contracts
Impossible Events "Contingent agreements to do or not to do anything if
an impossible event happens, are void, whether- theimpossibility of the event is known or not to the
parties, to the agreement at the time when it is made".
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Difference between Contingent Contracts and
Wagering Agreements
Mutual Promise :
A wagering agreement consists of mutual promises each of which are
conditional on the happening or non-happening of a certain event.
A contingent contract may not consist of the mutual promise. It may be
said that all wagers are contingent contracts but all contingent contractsare not wagers.
For example, insurance contracts, contracts of indemnity and guarantee
are contingent contracts but not wagers. Validity :
A wagering agreement is absolutely void. It is illegal in
Maharashtra and England. But a contingent contract is a valid
contract.
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Difference between Contingent Contracts and
Wagering Agreements
Performance :
In a wagering agreement, neither party intends to perform the contract, but
only to deal in differences.
This is not so in contingent contracts.
Interest in the subject matter :
In wagering agreement, the parties to the agreement have no other interests in
the subject matter of the agreement, except for the stake.
But in a contingent contract, parties do have some other interest in the subject
matter.
They are interested in the occurrence or non-occurrence of the event.
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Difference between Contingent Contracts and
Wagering Agreements
Future Event:
In a wagering agreement the future event is the sole
determining factor of the contract while in a contingent
contract, the future event is merely collateral or incidental
to the contract. Nature :
All contingent contracts are not of a wagering nature,
because all the contingent contracts are not void.
All wagering agreements are also contingent contractsbecause they are dependent on uncertain event.
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QUASI-CONTRACTS
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What is Quasi Contract?
Cases where obligation is imposed by lawupon a person for the benefit of another even
in the absence of a contract, are know as
quasi contract
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Types of Quasi Contracts 1.Claim for necessaries supplied to persons incapable of
contracting 2. Right to recover money paid for another person 3. Obligation of a person enjoying benefits of non-gratuitous
act 4. Responsibility of a finder of goods 5. Liability for money paid or thing delivered by mistake or
under coercion
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Kinds of Quasi-Contracts Necessaries Supplied to Person Incapable of Contracting
If a person, incapable of entering into a contract, or any one
whom he is legally bound to support, is supplied by anotherperson 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 (Sec.
68).
Thus, though the contracts by minors, idiots, lunatics, etc., are
void, but Section 68 provides that their estates are liable to
reimburse the trader who supplies them with necessaries of
life.
This is on the basis of quasi-contracts.
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Kinds of Quasi-Contracts
Payment by an Interested Person A person
(i) who is interested in the payment of money,
(ii) in which another is bound by law to pay, and
(iii) who therefore pays it, is entitled to be
reimbursed by the other (Sec. 69).
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Kinds of Quasi-Contracts
Liability for Non-gratuitous Act Where a person lawfully does anything for another
person or delivers anything to him, not intending to
do so gratuitously, and
such other person enjoys the benefit thereof, the latteris bound to make compensation to the former in
respect of, or to restore, the things so done or
delivered (Sec. 70) Illustrations
(a) A, a tradesman, leaves good, at B's house by mistake. B treats the goods as his
own. He is bound to pay for them.
(b) 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.
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Kinds of Quasi-Contracts
Responsibility of Finder of lost goods A person who finds goods belonging to another and
takes them into his custody, it is subject to the same
responsibility as abailee (Sec. 71).
He is bound to take as much care of the goods
bailed to him as a man of ordinary prudence would
under similar circumstances, take of his own goodsof the same bulk quality and value.
It is also the duty of the finder of lost goods totrace
the true owner
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Kinds of Quasi-Contracts
The Finder, however, can sell the goods in the following
cases : (i) where the thing found is in danger of perishing or losing
the greater part of its value; (ii) where theowner cannot, with reasonable diligence,be
found out; (iii) where the owner is found out, butrefuses to pay lawful
charges of the finder; and (iv) where the lawful charges of the finder, in respect of the
thing found,amount to two-thirds of the value of the thing
found.
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Kinds of Quasi-Contracts
Action for Money paid, or thing delivered,
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 (Sec. 72).
Mistake must be as to the existence of the
obligation and not merely as to some collateralmatter which may form a motive for the payment.
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Kinds of Quasi-Contracts
Accounts Stated/I.O.U This is a form of action known to English Law,
where the obligation arises from an admission of
indebtedness, from which the law may imply anundertaking to pay, e.g., an I.O.U. (I owe you).
Thus, where the balance has been struck in anaccount, an action can be brought thereon without
going into all the transactions which led up to it.
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Kinds of Quasi-Contracts
Claim for Quantum Meruit In addition to the above types of quasi-contracts, a
claim can also be made on the basis of Quantum
Meruit.
Where one person has rendered service to another in
circumstances which indicate an understanding
between them that it is to be paid for although noparticular remuneration has been fixed, the law will
infer, a promise to pay Quantum Meruit i.e.,as
much as the party doing the service has deserved.
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The claim for quantum meruit arises in the
following cases :
(i) When an agreement is discovered to be void, or-when a contract
becomes void,
(ii) When something is done without any intention to do so gratuitously
(Sec. 70). (iii) When there is an express or implied contract to render services but
there isno agreement as to remuneration,
(iv) When one party abandons or prevents or evenrefuses to perform the
contract,
(v) When a contract isdivisible and the party not in default has enjoyed thebenefit of the part performance,
(vi) When and indivisible contract for a lump sum is completely performed,
but badly, the person who has performed the contract can claim the lump
sum; but the other party can make a deduction for bad work
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The claim for quantum meruit arises in the
following cases :
In case of Void Agreement, or contract that
becomes Void (Section 65) :
When an agreement is discovered to be void, or
when a contract becomes void, any person who has
received any advantage under such agreement or
contract is bound to restore it, or to make
compensation for it, to the person from whom he
received it.
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The claim for quantum meruit arises in the
following cases :
In case of non-gratuitous act (Section 70):
The obligation to pay arises if the following
three conditions are satisfied : (i) The thing must have done or delivered lawfully; (ii) The person who had done or delivered the
thing must not have intended to do so gratuitously;
and (iii) The person for whom the act is done must
have enjoyed the benefit of the act.
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The claim for quantum meruit arises in the following
cases :
In case of act preventing the completion of contract :
If one party himself does not complete the contract or prevents the other
party to complete the contract, the aggrieved party can sue on quantum
meruit.
Example : C an owner of a magazine engaged P to write a book to bepublished as series in his magazine. After a few series were published, the
publication of the magazine was stopped. It was held that P could claim
payment on quantum meruit for the part already published. (Planche Vs.
Calburn).
In case of divisible contract:
The party at default may sue on a quantum meruit if the following
conditions are satisfied:
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The claim for quantum meruit arises in the following
cases :
In case of indivisible contract performed
completely but badly :
The party at default may claim the lumpsum less
deduction for bad work if the following conditionsare satisfied :
(i) if the contract is indivisble ;
(ii) if the contract is for lumpsum; (iii) if the contract is completely performed; and (iv) but the contract is performed badly.
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Similarity between Quasi-contracts and Contracts The outcome of quasi-contracts resemble that
created by a contract.
So far asclaim for damages are concerned,there is a similarity between a quasi-contractsand contract because in case of breach of a
quasi-contract, Section 73 provides for thesame remedies as provided in case of breach ofa contract.
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Compensation for failure to discharge
obligation created by quasi-contracts (Sec. 73):
When an obligation created by a quasi-contract
has not been discharged,
the injured party is entitled to receive the same
compensation from the party in default, as if the suedperson had contracted to discharge it and had broken his
contract.
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