Quasi-contract
Barron's Business Dictionary:
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Quasi-contract
Obligation created by law for reasons of justice and fairness. The doctrine of quasi contract is based upon the principle that a party must pay for a benefit he desired and received under circumstances that render it inequitable for him to retain it without making compensation. For example, a car owner brings his car in for brake repairs. The mechanic fixes the brakes and in doing so he also fixes a separate part of the axle that has a direct relationship to the car’s ability to brake correctly. Although the axle repair was not specifically contracted for, a quasi contract is implied for which the owner must pay the mechanic.
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West's Encyclopedia of American Law:
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Quasi Contract
This entry contains information applicable to United States law only.
An obligation that the law creates in the absence of an agreement between the parties. It is invoked by the courts where unjust enrichment, which occurs when a person retains money or benefits that in all fairness belong to another, would exist without judicial relief.
A quasi contract is a contract that exists by order of a court, not by agreement of the parties. Courts create quasi contracts to avoid the unjust enrichment of a party in a dispute over payment for a good or service. In some cases a party who has suffered a loss in a business relationship may not be able to recover for the loss without evidence of a contract or some legally recognized agreement. To avoid this unjust result, courts create a fictitious agreement where no legally enforceable agreement exists.
To illustrate, assume that a homebuilder has built a house on Alicia's property. However, the homebuilder signed a contract with Bobby, who claimed to be Alicia's agent but, in fact, was not. Although there is no binding contract between Alicia and the homebuilder, most courts would allow the homebuilder to recover the cost of the services and materials from Alicia to avoid an unjust result. A court would accomplish this by creating a fictitious agreement between the homebuilder and Alicia and holding Alicia responsible for the cost of the builder's services and materials.
Quasi contracts sometimes are called implied-in-law contracts to distinguish them from implied-in-fact contracts. An implied-in-law contract is one that at least one of the parties did not intend to create but that should, in all fairness, be created by a court. An implied-in-fact contract is simply an unwritten, nonexplicit contract that courts treat as an express written contract because the words and actions of the parties reflect a consensual transaction. The difference is subtle but not without practical effect.
One notable difference between the two implied contracts is that courts have no jurisdiction over quasi-contract claims against the federal government. Under the doctrine of sovereign immunity, the federal government cannot be sued without its consent. An implied-in-fact contract arises from an actual agreement that was not memorialized in writing, and if an agent of the government entered into an agreement, a court could find consent to suit on the part of the government. A quasi-contract claim, by contrast, does not allege that an agreement existed, only that one should be imposed by the court to avoid an unjust result. Because a quasi-contract claim does not allege any consent on the part of the government, it would fail under the doctrine of sovereign immunity.
A quasi contract may afford less recovery than an implied-in-fact contract. A contract implied in fact will construct the whole agreement as the parties intended, so the party seeking the creation of an implied contract may be entitled to expected profits as well as the cost of labor and materials. A quasi contract will be created only to the extent necessary to prevent unjust enrichment. As one court has put it, contracts implied in law are "merely remedies granted by the court to enforce equitable or moral obligations in spite of the lack of assent of the party to be charged" (Gray v. Rankin, 721 F. Supp 115 [S.D. Miss. 1989]). The amount of recovery for an implied-in-law contract usually is limited to the cost of labor and materials because it would be unfair to force a person who did not intend to enter into a contract to pay for profits.
Quasi contracts are made possible by the doctrine of quantum meruit (Latin for "as much as is deserved"), which allows courts to imply a contract where none exists. Quantum meruit includes implied-in-fact contracts as well as quasi contracts. Courts also use the term quantum meruit to describe the process of determining how much money the charging party may recover in an implied contract.
Mosby's Dental Dictionary:
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quasi contract
n
An obligation similar to a contract that arises not from an agreement of parties but from some relation between them or from a voluntary act of one of them.
Wikipedia on Answers.com:
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Quasi-contract
A quasi-contract (or implied-in-law contract) is a fictional contract created by courts for equitable, not contractual purposes.[1] A quasi-contract is not an actual contract, but is a legal substitute for a contract formed to impose equity between two parties. The concept of a quasi-contract is that of a contract that should have been formed, even though in actuality it was not. It is used when a court finds it appropriate to create an obligation upon a non-contracting party to avoid injustice and to ensure fairness.[2][3][4] It is invoked in circumstances of unjust enrichment,[4] and is connected with the concept of restitution.
Generally the existence of an actual or implied-in-fact contract is required for the defendant to be liable for services rendered, and a person who provides a service uninvited is an officious intermeddler who is not entitled to compensation. "Would-be plaintiffs cannot deliver unordered goods or services and demand payment for the benefit....A corollary is that one who does have an enforceable contract is bound by the contract's terms: subject to a few controversial exceptions, she cannot sue for restitution of the value of benefits conferred..." [5] However, in many jurisdictions under certain circumstances plaintiffs may be entitled to restitution under quasi-contract (as in the example of Oklahoma below).
Quasi-contracts are defined to be "the lawful and purely voluntary acts of a man, from which there results any obligation whatever to a third person, and sometime a reciprocal obligation between the parties."[6]
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Contract compared
In contracts, it is the consent of the contracting parties which produces the obligation; in quasi-contracts no consent is required, and the obligation arises from the law or natural equity, on the facts of the case. These acts are called quasi-contracts, because, without being contracts, they bind the parties as contracts do.[citation needed]
"A quasi-contract is not really a contract at all in the normal meaning of a contract," according to one scholar, but rather is "an obligation imposed on a party to make things fair."[3]
The Oklahoma Supreme Court has:
described the distinction between a contract and a quasi-contract in T & S Inv. Co. v. Coury, 593 P.2d 503 (Okla. 1979), as follows: A "quasi" or constructive contract is an implication of law. An "implied" contract is an implication of fact. In the former the contract is a mere fiction, imposed in order to adapt the case to a given remedy. In the latter, the contract is a fact legitimately inferred. In one the intention is disregarded; in the other, it is ascertained and enforced. In one, the duty defines the contract; in the other, the contract defines the duty. (quoting from Berry v. Barbour, 279 P.2d 335, 338 (Okla. 1954)).—Oklahoma Uniform Jury Instructions, § 23.10 citing cases therein at., [7]
Liability
The defendant's liability under quasi-contract is equal to the value of the benefit conferred by the plaintiff. The value is the fair market value of the benefit and not necessarily the subjective value that the defendant enjoys.[citation needed] A traditional measure of the fair market value is called quantum meruit, for "as much as is deserved."[citation needed] For example, accountant prepares tax-payer's taxes, finding a way to get him an unusually large refund. Tax-payer doesn't pay accountant. Assuming a court finds no contract, tax-payer is only liable for the fair market value of tax preparation services, which is not inflated up to account for the unusually large refund he enjoyed.[citation needed]
Under Oklahoma law:
The measure of damages in a quasi-contract action is the amount which will compensate the party aggrieved for the detriment proximately caused thereby, and, if the obligation is to pay money, the detriment caused by the breach in the amount due by the terms of the obligation.—Welling v. American Roofing & Sheet Metal Co., Inc., 617 P.2d 206, 209-210 (Okla. 1980), cited at., [7]
The party to be charged is any defendant, or in the case of a guarantee or surety, a co-defendant, in a breach of contract lawsuit.
Examples
An example of a quasi-contract is suppose that a vacationing physician is driving down the highway and finds Potter lying unconscious on the side of the road. The physician renders medical aid that saves Potter's life. Although the injured, unconscious Potter did not solicit the medical aid and was not aware that the aid had been rendered, Potter received a valuable benefit, and the requirements for a quasi contract were fulfilled. In such a situation, the law will impose a quasi contract.[8]
See also
Notes
- ^ See pg. 224 of Business Law 11th Ed. by Clarkson, Mille, Jentz, Cross.
- ^ Answers.com Website. Accessed June 30, 2008.
- ^ a b E. Marshall Wick, Notes for BUS 447, Gallaudet University, found at Gallaudet University Website. Accessed June 30, 2008.
- ^ a b American Law Encyclopedia Website. Accessed June 30, 2008.
- ^ Douglas Laycock, Modern American Remedies, 3rd edition (2002) pg. 566
- ^ Bouvier Law Dictionary, The Lectric Law Library's Lexicon.
- ^ a b Oklahoma Uniform Jury Instructions, Civil, Chapter 23, Article PART ONE, Section Instruction 23.10 - QUASI-CONTRACT (QUANTUM MERUIT OR QUANTUM VALEBANT), found at Oklahoma Uniform Jury Instructions Website. Accessed June 30, 2008.
- ^ Clarkson, Kenneth (2012). Business Law: Text and Cases: Legal, Ethical, Global, and Corporate Environment 12th ed. pp. 212. ISBN 10: 0538470828.
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Barron's Business Dictionary
Dictionary of Business Terms. Copyright © 2007 by Barron's Educational Series, Inc. All rights reserved.
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West's Encyclopedia of American Law
West's Encyclopedia of American Law. Copyright © 1998 by The Gale Group, Inc. All rights reserved.
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Mosby's Dental Dictionary
Mosby's Dental Dictionary. Copyright © 2004 by Elsevier, Inc. All rights reserved.
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