Quasi-Contracts Under Laws of Tanzania.

QUASI-CONTRACTS

(Certain Relations Resembling Those Created by Contracts – Sections 68 to 72)

Quasi-contracts refer to legal obligations that arise not from any actual agreement between parties but from circumstances where the law imposes duties to prevent unjust enrichment. These obligations are neither contractual nor tortious, but courts recognize and enforce them as if they were contracts. As Dr. Jenks defines, a quasi-contract is a situation where the law, based on principles of natural justice, imposes an obligation on a person similar to what would arise from a true contract, even though no actual agreement—express or implied—exists between the parties.

Illustration:

If X supplies goods to Y, who accepts and consumes them, Y is bound to pay for them, forming a tacit (implied) contract. However, if X’s servant mistakenly delivers the goods to Z, thinking he is Y, and Z consumes them, Z is still liable to compensate X. This is a classic example of a quasi-contract.

The key principle behind quasi-contracts is that no person should unjustly enrich themselves at another’s expense. Typically, such claims involve monetary compensation. Sections 68 to 72 of the The Law of Contract Act [CAP. 345 R.E. 2019], detail specific scenarios recognized as quasi-contractual in nature:

1. Supply of Necessaries to a Person Incapable of Contracting (Section 68):

When necessaries suitable to a person’s lifestyle are provided to someone incapable of entering into a contract (such as a minor or a lunatic), or to someone they are legally obliged to support, the supplier is entitled to reimbursement from the incapable person’s property.

Examples:

A supplies necessaries to B, a lunatic. A can be reimbursed from B’s property.

A supplies necessaries to B’s wife and children. B is a lunatic. A is entitled to reimbursement from B’s property.

Key Points:

The goods must be ‘necessaries’ depending on the recipient’s social standing.

Only the property of the incapable person is liable; there is no personal liability if there is no property.

2. Reimbursement for Payment Made on Behalf of Another (Section 69):

If a person pays money that another is legally bound to pay, and the payer is interested in making the payment (to protect their own interest), the payer can seek reimbursement.

Example:

B leases land from A. A owes land revenue to the government, and the land is about to be auctioned for non-payment. B pays the dues to protect his leasehold interest. A is required to reimburse B.

Conditions:

The payer must have a legal or proprietary interest in making the payment.

The payment must not be voluntary; it should be compelled.

The payment must be made to a third party.

The amount must be one that the other person was legally obliged to pay.

3. Compensation for Non-Gratuitous Acts (Section 70):

If a person lawfully does something for another or delivers something, not intending it to be free, and the other person benefits, the recipient must compensate or return the item.

Examples:

A mistakenly leaves goods at B’s house. B uses them. B must pay A.

A saves B’s property from a fire, intending to do it gratuitously. A is not entitled to payment.

Conditions:

The act must be lawful.

It must be done without the intention of being a gift.

The other party must have enjoyed the benefit.

4. Finder of Goods (Section 71):

Anyone who finds goods belonging to someone else and takes custody is deemed a bailee under the law. Although there’s no agreement, they are required to take reasonable care of the goods, just as they would of their own property.

5. Money Paid or Goods Delivered by Mistake or Under Coercion (Section 72):

A person to whom money has been paid or goods delivered by mistake or under coercion must return or repay it.

Examples:

A and B jointly owe C Rs. 1,000. A pays it. B, unaware, also pays C. C must refund B.

A railway company illegally overcharges for delivering goods. The consignee pays to retrieve the goods but is entitled to recover the excess.

Note: The term “mistake” includes both mistakes of fact and law. Section 72 stands independently of Sections 21 and 22, allowing recovery when money is paid under any kind of mistake [Sales Tax Officer, Benares v. Kanhaiyalal Makanlal Saraf, (1959), S.C.J. 53].

Quantum Meruit:

"Quantum meruit" translates to “as much as earned.” Generally, a party cannot demand performance unless they have fully performed their part of a contract. However, if a contract is repudiated or becomes impossible to perform, the party who has already performed part of the work can claim compensation for what they have done. This claim does not arise from the original contract but from a quasi-contractual obligation imposed by law [Patel Engg. Co. Ltd. v. Indian Oil Corporation Ltd., AIR (1975) Pat. 212].

Quantum Meruit Claims: Circumstances and Illustrations

The doctrine of quantum meruit, meaning "as much as is earned" or "as much as is merited", arises in situations where a party deserves to be compensated for services rendered or work done, even though a valid contract may not exist or may no longer be enforceable. Such claims are based not on the contract itself, but on a quasi-contractual obligation imposed by law. The right to claim under quantum meruit may arise in the following instances:

When a Contract is Discovered to be Unenforceable (Section 65)

If an agreement is found to be void or becomes void, and one party has gained a benefit under it, the law requires that such benefit be returned or compensated for.

Examples:

A pays B Tsh. 100,000 for B’s promise to marry A’s daughter, C. Unknown to both, C is already deceased. The agreement is void, and B must return the Rs. 1,000 to A.

A agrees to deliver 250 kilos of rice to B before May 1st, but delivers only 130 kilos. B retains the delivered quantity. Though the contract is breached, B must pay for the rice received.

A singer, A, agrees to perform at B’s theatre twice a week for two months for Tsh. 100,000 per performance. After five performances, A deliberately fails to appear. B cancels the contract but must still pay for the five performances already rendered.

When One Party Abandons or Refuses to Perform the Contract

If one party refuses or fails to perform their part of the agreement, the other party who has partially performed may claim compensation for the work already done.

Example:

C, a magazine owner, hires P to write a book to be published in instalments in his magazine. After publishing a few instalments, the magazine is discontinued. P is entitled to claim compensation for the published work on the basis of quantum meruit [Planche v. Colburn (1831) 8 Bing. 14].

When a Contract is Divisible

Where a contract consists of several parts and is divisible, and part performance has been accepted by the other party, the party in default may still recover payment proportionate to the part performed.

When an Indivisible Contract is Fully Performed, but Defectively

If an indivisible contract for a lump sum is fully executed but not to the agreed standard, the party who performed the work may claim the agreed amount, subject to deductions for defects.

Example:

A agrees to decorate B’s flat for a lump sum of Tsh 700,000. A completes the job, but B is dissatisfied with the quality and spends Tsh 200,000 fixing the defects. The court held A was entitled to recover Tsh 500,000 (Tsh 700,000 minus Tsh 200,000) from B [Hoening v. Isaacs (1952) AIR 11 E.R. 176].

In all these cases, the core principle of quantum meruit is to prevent unjust enrichment—ensuring that one party does not unfairly benefit at the expense of another without reasonable compensation.