Important Difference Between Contract and Quasi Contract

Contract

A contract is a legally binding agreement between two or more parties. It can be written or verbal, and outlines the terms and conditions of the agreement, including what each party will do and what they will receive in return. Contracts can be used for a wide range of purposes, such as buying and selling goods or services, renting property, and employment. To be considered a valid contract, it must include an offer, acceptance, and consideration (something of value given by one party in exchange for something else).

Example of  Contract

An example of a contract is a rental agreement between a landlord and tenant. The rental agreement outlines the terms and conditions of the tenancy, including the rental amount, due date, security deposit, and length of the tenancy. It also includes information about the responsibilities of each party, such as the landlord’s responsibility to maintain the property and the tenant’s responsibility to pay rent on time and keep the property in good condition.

Another example of a contract is an employment contract between an employer and employee. The employment contract outlines the terms and conditions of the employment, including the job duties, salary, benefits, and length of employment. It also includes information about the responsibilities of each party, such as the employer’s responsibility to provide a safe working environment and the employee’s responsibility to comply with company policies and maintain confidentiality.

Types of Contracts

There are several types of contracts, including:

  • Express contract: An express contract is a contract where the terms are explicitly stated by the parties. This can be in the form of a written or verbal agreement.
  • Implied contract: An implied contract is a contract where the terms are inferred from the actions and conduct of the parties. This type of contract does not involve any explicit statements, but the parties can still be bound by the agreement.
  • Executed contract: An executed contract is a contract where both parties have fulfilled their obligations and the contract is completed.
  • Executory contract: An executory contract is a contract where one or both parties have yet to fulfill their obligations.
  • Bilateral contract: A bilateral contract is a contract where both parties make promises to each other. The most common example is a sales contract, where the seller promises to transfer ownership of the goods to the buyer and the buyer promises to pay the agreed-upon price.
  • Unilateral contract: A unilateral contract is a contract where one party makes a promise in exchange for the other party’s performance. An example of a unilateral contract is a reward offered for finding a lost item.
  • Formal contract: A formal contract is a contract that is written and signed by both parties, and is legally binding. Examples of formal contracts include real estate purchase agreements and employment contracts.
  • Informal contract: An informal contract is a contract that is not written or signed, and is not legally binding. Examples of informal contracts include handshake deals or verbal agreements.

Elements of a Contract

The essential elements of a contract include:

  • Offer: An offer is a proposal made by one party to enter into a legally binding agreement with the other party. The offer must be clear and specific, and must be communicated to the other party.
  • Acceptance: Acceptance is the other party’s agreement to the terms of the offer. It must be clear and unconditional, and must be communicated to the offeror.
  • Consideration: Consideration is something of value that is given or promised by one party in exchange for something else. It can be money, goods, services, or a promise to do or not do something.
  • Mutual assent: Mutual assent, also known as a “meeting of the minds,” is a mutual understanding and agreement between the parties to the terms of the contract.
  • Capacity: Both parties must have the legal capacity to enter into a contract. This means they must be of legal age, not under duress or undue influence, and not incapacitated.
  • Legality: The contract must not be for an illegal or unlawful purpose.
  • Formality: Some contracts require a specific formalities to be legally binding, such as written and signed by both parties, or notarized.

Discharge of Contract

Discharge of a contract refers to the termination or completion of the contractual obligations between the parties. There are several ways in which a contract can be discharged:

  • Performance: A contract is discharged when both parties have fulfilled their obligations under the contract. This is known as “performance” and is the most common way for a contract to be discharged.
  • Breach: A contract is discharged when one party fails to fulfill their obligations under the contract. This is known as a “breach” and can be either a “material” or “immaterial” breach. A material breach is a serious violation of the contract, while an immaterial breach is a minor violation.
  • Frustration: A contract is discharged when an event occurs that makes it impossible or illegal for one or both parties to fulfill their obligations under the contract. This is known as “frustration” and can be due to events such as war, natural disasters, or death of a party.
  • Agreement: A contract is discharged when both parties agree to terminate the contract. This is known as “agreement” and can be done through a new contract, a written agreement, or a verbal agreement.
  • Novation: A contract is discharged when the parties agree to substitute a new contract for the original contract. This is known as “novation” and requires the agreement of all parties, including any third party guarantors.
  • Statute of Limitations: A contract is discharged when a certain period of time has passed and one or both parties have failed to fulfill their obligations under the contract, this is known as Statute of Limitations.
  • Impossibility: A contract is discharged when it becomes impossible for one or both parties to fulfill their obligations under the contract, this is known as Impossibility.
  • Illegality: A contract is discharged when the performance of the contract becomes illegal.

Quasi Contract

A quasi-contract, also known as a contract implied in law, is a legal fiction created by the courts to prevent unjust enrichment. It is not a true contract because it is not based on an agreement between the parties, but it is treated as if it were a contract to prevent one party from unjustly benefiting at the expense of the other.

A quasi-contract is created when one party has received a benefit from another party and it would be unjust for them to retain that benefit without paying for it. For example, if a person finds a lost item and takes possession of it, a court might imply a quasi-contract requiring the finder to pay the owner for the value of the item.

Another example is when a person receives a service from another, a court might imply a quasi-contract requiring the person who received the service to pay for it, even though there was no contract between the parties.

Quasi-contracts are similar to restitution, which is a legal principle that is used to restore the status quo and prevent unjust enrichment, but it’s based on the principle of unjust enrichment and not based on any agreement between parties.

Examples of Quasi Contract

Here are a few examples of situations where a court might imply a quasi-contract:

A person finds a valuable item and takes possession of it. A court might imply a quasi-contract requiring the finder to pay the true owner for the value of the item, even though there was no agreement between the parties.

A contractor performs work on a property without a written contract. A court might imply a quasi-contract requiring the property owner to pay the contractor for the value of the work performed, even though there was no agreement between the parties.

A person receives medical treatment in an emergency situation. A court might imply a quasi-contract requiring the person to pay the medical provider for the value of the treatment, even though there was no agreement between the parties.

A person receives goods or services from a business and is billed for them, but disputes the bill. A court might imply a quasi-contract requiring the person to pay for the goods or services, even though there was no agreement between the parties.

A person uses a product or service and receives a benefit from it, but did not pay for it. A court might imply a quasi-contract requiring the person to pay for the product or service, even though there was no agreement between the parties.

It’s worth mentioning that Quasi-contracts are not common and usually courts consider them as a last resort in situations where there was no contract or any agreement between parties but one party has benefited from the other’s actions.

Types of Quasi Contract

There are several types of quasi-contracts, which are based on different legal principles and situations:

Unjust enrichment: A quasi-contract based on the principle of unjust enrichment, where one party has received a benefit from another party and it would be unjust for them to retain that benefit without paying for it.

Necessaries supplied to a person incapable of contracting: A quasi-contract that is applied in situations where a person is unable to enter into a contract, such as a minor or a person under duress, and another party supplies them with necessities, such as food, clothing, or medical treatment.

Money paid or property delivered by mistake: A quasi-contract that is applied in situations where one party pays or delivers property to another party by mistake, and the court implies a contract requiring the receiving party to return the money or property.

Money received and applied by person in wrongful possession: A quasi-contract that is applied in situations where one party receives money or property in wrongful possession, and the court implies a contract requiring the receiving party to return the money or property.

Services rendered under a voidable contract: A quasi-contract that is applied in situations where a contract is voidable, such as a contract entered into under duress or undue influence, and one party has performed services under the contract, the court implies a contract requiring the other party to pay for the services.

Elements of Quasi Contract

The essential elements of a quasi-contract are:

  • No express contract: There must be no express contract between the parties, as a quasi-contract is a legal fiction created by the courts to prevent unjust enrichment.
  • Unjust enrichment: One party must have received a benefit from the other party and it would be unjust for them to retain that benefit without paying for it. The benefit can be in the form of money, goods, services, or property.
  • Lack of legal justification: There must be no legal justification for the benefit received by one party, such as a gift or a lawful transaction.
  • Reasonable expectations: The party who has received the benefit must have reasonably expected to be compensated for it, or have had reason to know that they would be expected to pay for it.
  • Reasonable compensation: The court must be able to determine a reasonable compensation for the benefit received, based on the value of the benefit and the circumstances of the case.
  • No legal defense: The party who received the benefit must not have a valid legal defense for not paying for it, such as duress, undue influence, or mistake.
  • No legal remedy: There must be no other legal remedy available to the party who is seeking compensation, such as a contract or a statutory claim.

Features of Quasi Contract

Here are some key features of a quasi-contract:

  • No agreement: A quasi-contract is not based on any agreement between the parties, it is created by the court.
  • Unjust enrichment: A quasi-contract is based on the principle of unjust enrichment, where one party has received a benefit from another party and it would be unjust for them to retain that benefit without paying for it.
  • No consideration: A quasi-contract does not require consideration, which is something of value given by one party in exchange for something of value received by the other party, as it’s not based on any agreement.
  • No intention: A quasi-contract does not require any intention to create a legally binding agreement, as it’s not based on any agreement.
  • Reasonable compensation: The court will determine a reasonable compensation for the benefit received based on the value of the benefit and the circumstances of the case.
  • No legal defense: The party who received the benefit must not have a valid legal defense for not paying for it, such as duress, undue influence, or mistake.
  • No legal remedy: There must be no other legal remedy available to the party who is seeking compensation, such as a contract or a statutory claim.

Kinds of Quasi-Contract

There are several types of quasi-contracts, which are based on different legal principles and situations:

  • Unjust enrichment: A quasi-contract based on the principle of unjust enrichment, where one party has received a benefit from another party and it would be unjust for them to retain that benefit without paying for it.
  • Necessaries supplied to a person incapable of contracting: A quasi-contract that is applied in situations where a person is unable to enter into a contract, such as a minor or a person under duress, and another party supplies them with necessities, such as food, clothing, or medical treatment.
  • Money paid or property delivered by mistake: A quasi-contract that is applied in situations where one party pays or delivers property to another party by mistake, and the court implies a contract requiring the receiving party to return the money or property.
  • Money received and applied by person in wrongful possession: A quasi-contract that is applied in situations where one party receives money or property in wrongful possession, and the court implies a contract requiring the receiving party to return the money or property.
  • Services rendered under a voidable contract: A quasi-contract that is applied in situations where a contract is voidable, such as a contract entered into under duress or undue influence, and one party has performed services under the contract, the court implies a contract requiring the other party to pay for the services.

Comparison Between Contract and Quasi Contract

Here is a comparison of the key differences between a contract and a quasi-contract:

Contracts

Quasi-Contracts

Based on agreement between the parties Based on legal principles and court-imposed obligations
Requires consideration Does not require consideration
Requires intention to create a legally binding agreement Does not require intention to create a legally binding agreement
Enforceable by law       Enforceable by law
Legal remedies available in case of breach Legal remedies available in case of breach
Can be express or implied Implied by the court
Can be written or oral Not based on any agreement

Important Differences Between Contract and Quasi Contract

Here are some key differences between a contract and a quasi-contract:

  1. Agreement: A contract is based on an agreement between the parties, while a quasi-contract is based on legal principles and court-imposed obligations.
  2. Consideration: A contract requires consideration, which is something of value given by one party in exchange for something of value received by the other party, while a quasi-contract does not require consideration.
  3. Intention: A contract requires an intention to create a legally binding agreement, while a quasi-contract does not require any intention to create a legally binding agreement.
  4. Enforceability: Both contracts and quasi-contracts are enforceable by law.
  5. Legal Remedy: Both contracts and quasi-contracts have legal remedies available in case of breach.
  6. Express or Implied: Contracts can be express or implied, while quasi-contracts are implied by the court.
  7. Written or Oral: Contracts can be written or oral, while quasi-contracts are not based on any agreement.
  8. Unjust enrichment: Quasi-contracts are based on the principle of unjust enrichment, where one party has received a benefit from another party and it would be unjust for them to retain that benefit without paying for it.

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