What is a 'Quasi Contract'
A quasi contract is an agreement between two parties without previous obligations to one another that has been created and legally recognized by the court system. under a quasi-contract, neither involved party is expected to create such an agreement; this contract is arranged and imposed by a judge to correct a circumstance in which one party acquires something at the expense of the other party.
BREAKING DOWN 'Quasi Contract'For example, consider a pizza that is delivered to the wrong address. The pizza has already been paid for. If the individual does not correct the delivery man and instead keeps the pizza, the court system could issue a quasi contract that would require the individual to pay back the amount of the pizza to the party that paid for the pizza. The contract is used to prevent any party from benefiting from the situation at the other party's expense; the restitution required under the contract is to make the situation fair.
The History of Quasi Contracts
Under common law jurisdictions, quasi contracts can be followed back to the Middle Ages under a form of action known as indebitatus assumpsit. This law saw that the plaintiff in a case received a sum of money from the defendant, as dictated by the courts, as if the defendant had agreed to pay the plaintiff. Indebitatus assumpsit was the courts' way to make one party pay the other as if a contract or agreement already existed between the two parties – the defendant’s promise or agreement to be bound by the contract requiring reparations was implied by law. At the very beginning of the quasi contract's use, it was typically imposed in order to enforce restitution obligations.
Certain aspects must be in place for a judge to issue a quasi contract. One party – the plaintiff – must have given a tangible item or a service to another party – the defendant – with an expectation/implication that payment would be given. The defendant must have accepted or acknowledged receipt of the valuable thing but did not make any effort or offer to pay. Then, the plaintiff must express why it would be unjust for the defendant to receive the thing of value without paying for it, so the defendant received unjust enrichment.
Considering the example above, the individual that ordered the pizza and paid for it would have every right to demand payment from the individual who actually received the pizza; the first individual is the plaintiff, the latter is the defendant. A quasi contract, also known as an implied contract, would be handed down, requiring the defendant to pay restitution to the plaintiff. The restitution – known as quantum meruit – is calculated by the amount or the extent to which the defendant was unjustly enriched.