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Quasi-contract

 
Business Dictionary: Quasi Contract
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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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Dental Dictionary: quasi contract
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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.

Law Encyclopedia: Quasi Contract
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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.

Wikipedia: Quasi-contract
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A quasi-contract, also called an implied-in-law contract,[1] is a legal substitute for a contract. A quasi-contract is a contract that should have been formed, even though in actuality it was not. It is used when a court wishes to create an obligation upon a non-contracting party to avoid injustice and to ensure fairness.[2] [1] [3] It is invoked in circumstances of unjust enrichment.[3]

Generally 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..." [4] However, in many jurisdictions under certain circumstances plaintiffs may be entitled to restitution under quasi-contract (as with 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."[5] It "is not legitimately done, but the terms are accepted and followed as if there is a legitimate contract."[6]

Contents

Elements

According to the Oklahoma pattern jury instructions, the elements of quasi-contract are:

  1. Plaintiff furnished / rendered valuable goods / services to Defendant with a reasonable expectation of being compensated;
  2. Defendant knowingly accepted the benefits of the goods / services; and
  3. Defendant would be unfairly benefited by the services / receiving the goods if no compensation were paid to the Plaintiff.
—[7]

Knowledge, the second element, is required, and if the defendant had no knowledge of the benefits, there would be no contract of any kind, even a quasi-contract.[1]

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."[1]

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 the case of a plumber who accidentally installs a sprinkler system in the lawn of the wrong house. The owner of the house had learned the previous day that his neighbor was getting new sprinklers. That morning, he sees the plumber installing them in his own lawn. Pleased at the mistake, he says nothing, and then refuses to pay when the plumber hands him the bill. Will the man be held liable for payment? Yes, if it could be proven that the man knew that the sprinklers were being installed mistakenly, the court would make him pay because of a quasi-contract. If that knowledge could not be proven, he would not be liable.[citation needed]

Examples of quasi-contracts vary by jurisdiction. A painter, who mistakenly paints a house with the owner's knowledge, can sue in court to get paid.[1] A mechanic who fixes the brakes to a car as requested, but who also makes repairs to the axle (without which the brakes would not function properly), has an implied quasi-contract.[2] For a casual job, there is almost never a written contract, but often a quasi-contract.[6] A homebuilder who signs a contract with a purported agent, who actually has no authority, can recover the cost of the services and materials from the homeowner.[3]

See also

Notes

  1. ^ a b c d e E. Marshall Wick, Notes for BUS 447, Gallaudet University, found at Gallaudet University Website. Accessed June 30, 2008.
  2. ^ a b Answers.com Website. Accessed June 30, 2008.
  3. ^ a b c American Law Encyclopedia Website. Accessed June 30, 2008.
  4. ^ Douglas Laycock, Modern American Remedies, 3rd edition (2002) pg. 566
  5. ^ The Lectric Law Library's Lexicon.
  6. ^ a b Legal Explanations Website. Accessed June 30, 2008.
  7. ^ a b c 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.

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Business Dictionary. Dictionary of Business Terms. Copyright © 2000 by Barron's Educational Series, Inc. All rights reserved.  Read more
Dental Dictionary. Mosby's Dental Dictionary. Copyright © 2004 by Elsevier, Inc. All rights reserved.  Read more
Law Encyclopedia. West's Encyclopedia of American Law. Copyright © 1998 by The Gale Group, Inc. All rights reserved.  Read more
Wikipedia. This article is licensed under the Creative Commons Attribution/Share-Alike License. It uses material from the Wikipedia article "Quasi-contract".  Read more