Quasi Contract: What It Means and How It Works

In business, contracts are crucial for building trust and ensuring that agreements are legally binding. However, what happens when there is no formal agreement in place? This is where the concept of quasi contracts comes into play.

A quasi contract is a legal term for an obligation that is imposed by the law in the absence of a contract. This means that even though two parties may have never formally agreed to a particular arrangement, the law may still require one of the parties to pay for goods or services provided by the other party.

For example, imagine that a homeowner hires a contractor to fix their roof. However, before the contractor could complete the work, the homeowner becomes ill and has to be hospitalized. The contractor finishes the work anyway and submits a bill for the services rendered. In this scenario, the homeowner never signed a formal contract with the contractor, but the law may still require them to pay for the work completed under a quasi contract.

The concept of quasi contract exists to prevent unjust enrichment. This means that if one party receives a benefit from another party, they should not be able to keep that benefit without compensating the other party in some way. Quasi contracts are also known as «implied-in-law contracts» because they are not created by the express agreement of the parties involved, but rather by the law itself.

There are several elements required for a quasi contract to be established. Firstly, there must be a benefit conferred upon one party by another. Secondly, the party that received the benefit must have knowledge of the other party`s expectation of payment. Thirdly, the party receiving the benefit must have the ability to pay for it.

It is worth noting that quasi contracts are not the same as implied contracts. An implied contract is one that is inferred by the actions or conduct of the parties involved. In contrast, quasi contracts are created by the law itself, not by the behavior of the parties.

In conclusion, a quasi contract is a legal term used to describe an obligation that is imposed by the law in the absence of a formal contract. Quasi contracts exist to prevent unjust enrichment and are based on the idea that if one party receives a benefit from another, they should compensate the other party in some way. If you are unsure whether a quasi contract exists in a particular situation, it is always advisable to seek legal advice.