What Is a Quasi Contract?
A quasi contract is a retroactive arrangement between two parties who have no previous obligations to one another. It is created by a judge to correct a circumstance in which one party acquires something at the expense of the other.
The contract aims to prevent one party from unfairly benefiting from the situation at the other party's expense. These arrangements may be imposed when goods or services are accepted, though not requested, by a party. The acceptance then creates an expectation of payment.
A quasi contract is a court-imposed document designed to prevent one party from unfairly benefiting at another party's expense, even though no contract exists between them.
Understanding Quasi Contracts
Quasi contracts outline the obligation of one party to another when the latter is in possession of the original party's property. These parties may not necessarily have had a prior agreement with one another. The agreement is imposed by law through a judge as a remedy when Person A owes something to Person B because they come into possession of Person A's property indirectly or by mistake. The contract becomes enforceable if Person B decides to keep the item in question without paying for it.
Because the agreement is constructed in a court of law, it is legally enforceable, so neither party has to agree to it. The purpose of the quasi contract is to render a fair outcome in a situation where one party has an advantage over another. The defendant—the party who acquired the property—must pay restitution to the plaintiff who is the wronged party to cover the value of the item.
A quasi contract is also known as an implied contract. It would be handed down ordering the defendant to pay restitution to the plaintiff. The restitution, known in Latin as quantum meruit, or amount earned, is calculated according to the amount or extent to which the defendant was unjustly enriched.
These contracts are also referred to as constructive contracts as they are created when there is no existing contract between the two parties involved. If there is an agreement already in place, though, a quasi contract generally cannot be enforced.
- A quasi contract is a retroactive arrangement between two parties who have no previous obligations to one another.
- It is created by a judge to correct a circumstance in which one party acquires something at the expense of the other.
- The plaintiff must have furnished a tangible item or service to another party with the expectation or implication that payment would be given.
- The defendant must have accepted, or acknowledged receipt of, the item but made no effort or offer to pay for it.
Example of a Quasi Contract
A classic quasi contract circumstance may be created by the delivery of a pizza to the wrong address—that is, not to the person who paid for it. If the individual at the incorrect address fails to fess to the error and instead keeps the pizza, they could be seen as having accepted the food, and thus be obliged to pay for it. A court could then rule to issue a quasi contract that requires the pizza recipient to pay back the cost of the food to the party who purchased it or to the pizzeria if it subsequently delivered a second pie to the purchaser. The restitution mandated under the quasi contract aims for a fair resolution of the situation.
Requirements for a Quasi Contract
Certain aspects must be in place for a judge to issue a quasi contract:
- One party, the plaintiff, must have furnished a tangible item or service to another party, or the defendant, with the expectation or implication that payment would be given.
- The defendant must have accepted—or acknowledged receipt of—the item of value, but made no effort or offer to pay for it.
- The plaintiff must then express why it is unjust for the defendant to receive the good or service without paying for it. In other words, the plaintiff must establish that the defendant received unjust enrichment.
Considering the example above, the individual who 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 being the plaintiff, the latter being the defendant.
Quasi Contract History
Under common-law jurisdictions, quasi contracts originated in the Middle Ages under a form of action known in Latin as indebitatus assumpsit, which translates to being indebted or to have undertaken a debt. This legal principle was the courts' way of making one party pay the other as if a contract or agreement already existed between them. So the defendant’s obligation to be bound by the contract is seen as implied by law. From its earliest uses, the quasi contract was typically imposed to enforce restitution obligations.