37087770 contingent and quasi contact

8/3/2019 37087770 Contingent and Quasi Contact

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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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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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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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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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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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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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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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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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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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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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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.

37087770 contingent and quasi contact

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