Putnam's Handy Law Book for the Layman

Quasi Contracts. - A quasi contract is a legal obligation arising without the assent of one from the receipt of a benefit which, if retained, would be unjust. The law therefore compels him to make restitution. He is required to do this, not because he has promised to make restitution, but because he has received a benefit which he cannot justly retain.

Benefit as a Gift

If one at the time of conferring a benefit on another confers it as a gift, it cannot afterward be claimed that the gift was conferred relying on a supposed contract. Consequently, though the donor's intention may be subsequently altered, no obligation to make restitution will arise. Nor does the failure of the donee to reciprocate the donor's generosity or indirectly reward him, create any right or claim on the donor's part to a return from the donee.

In One's Own Interest

Where one, in the preservation of his own property or the promotion of his own interests, bestows some incidental advantage to another, there is no legal obligation to pay for the value of it. Thus the owner of the lower part of a house is not liable for the advantage resulting to him from the [219]repair of the roof by the owner of the upper part and roof. Nor is one who has thickened and strengthened that part of an ancient party wall which is on his own land, in order to sustain the building he is erecting, entitled to recover from the adjoining owner who used the wall. Nor can anything be recovered from the owner of a vessel by the underwriters who had her docked for repairs though by such docking the owner gained an important benefit. Nor can one who in pumping out his quarry frees another quarry from water recover anything for the service. Nor can one who is benefited by experiments made by another to test the value of patented inventions, in which both are interested, be legally required to pay for the benefit he has received.

Between Family Members

As no expectation of payment does presumptively arise when services are rendered by one member of a family to another member, one who claims payment for them must prove that they were not rendered as a gratuity, but on the legal supposition that he had a right to compensation.

Acceptance Without Intention to Pay

One who knows or who has reason to believe that compensation is expected for goods or services tendered to him ought not to accept them unless he intends to pay for them. If he does his act of acceptance will be regarded as a promise of payment, and can be enforced. But if one accepts goods or services without knowledge or reason to believe that compensation will be expected, what then? Suppose A sends a barrel of apples to B supposing, from their previous course of dealing, that B will return them if he does not want them? B should either return them or pay. Suppose B is misinformed and learns that A is giving a barrel of apples to each of his customers? Then he would [220]be justified in keeping them until he learned the truth.

Contract Impossible to Execute

If, in making a contract it is taken for granted by both parties that a certain fact exists, which, if not existing, would make the contract impossible of execution, the contract is void. Thus, in contracts for the sale of specific personal property, its existence at the time of the sale is generally assumed. If the property has perished or been destroyed, the contract is void. The same rule has been applied to the sale of non-existent reality, of the transfer of void or spurious securities, of the assignment of a void lease. In all these cases the money paid in misreliance on the void contract is recoverable.

Insurance Without Risk

Premiums paid on a policy of marine insurance by one who in reality had no goods on board, or for a voyage that was never begun, may be recovered. The existence of a risk is assumed by both parties, in fact there is no risk, consequently there was nothing to which the contract of insurance related.

General or Indefinite Promise

"A promise," says Woodward [Possibly George Washington Woodward 1809-1875], "which is so general or indefinite that it does not enable the courts to determine the nature and extent of the obligation assumed must be regarded as no promise at all. Such has been the fate of a promise to pay good wages; a promise to convey a hundred acres of land, the land not being described; a promise to divide profits, no rate of division being indicated. Instances might be multiplied. A benefit conferred, in the honest, though mistaken, belief that such a promise is binding ought in justice to be restored. Restitution is accordingly enforced."

Execution in a Particular Manner

The law requires some kinds of contracts to be executed in a particular manner. Thus, by statute, many municipalities can make contracts, or those of a particular kind, only on sealed bids or proposals [221]and after proper advertising for bids, etc. If these things are not done, the contract made in disregard of them is invalid. The courts of this country have got into deep confusion in applying this rule to private corporations. Suppose a corporation makes a loan without proper authority and receives the money, can the lender recover it? The corporation had no right to borrow, of this the lender knew as well as the borrower. Both parties are in the wrong. The highest court in this country has been more consistent than many of the state courts, and holds that a contract it cannot make for lack of legal power is not made and cannot be ratified. "No performance on either side can give the unlawful contract any validity, or be the foundation of any right of action upon it." Nevertheless though a contract is unlawful and void because the corporation was unable to make it, a court strives to do justice between the parties by permitting property or money, parted with on faith of the unlawful contract, to be recovered back, or compensation to be made therefor.

Some Required to Be in Writing

The lack of another legal requirement in making contracts gives rise to serious consequences. We have learned that the Statute of Frauds requires for the validity of many contracts that a memorandum of them be made in writing and signed by one or both contracting parties. By English law the statute provides a rule of evidence, that a writing must be shown as proof of a contract before the courts will consider it as having been made; by some of the American courts a contract that does not meet the requirements of the statute is held to be void; by other courts they declare that though the contract is not void it cannot be enforced.

Statute of Frauds

While the Statute of Frauds in some states is [222]regarded as completely nullifying contracts not conforming to its requirements, they are not anywhere held to be illegal, that is, are not made in violation of law. "There appears," says Woodward, "to be no reason of policy, therefore, for denying to a party thereto in a proper case, the aid of the court in obtaining quasi contractual relief, or the right to establish the justice of his quasi contractual demand by proving the terms of the unenforceable agreement. True, the evidence of the agreement in such a case, must be oral; but since the evidence is for the purpose of proving, not a contract as such, but a transaction resulting in an unjust benefit to the defendant, its introduction would seem not to contravene the statute."

Purchaser of Land Under Oral Contract

A purchaser of land under an oral contract, who is given possession and subsequently fails to pay, is liable for the use of the land to him while he has occupied it. Though the act of the seller in giving the purchaser possession without conveying the title may not be regarded as a part performance of the contract of sale, yet the benefit resulting to the purchaser creates an obligation to make restitution which the courts will enforce. The improvement of land by the purchaser under an oral contract is an act which enables him to enforce the contract in equity. Improvements made by a lessee under an oral lease within the statute are governed by the same rules as those of improvements made by a purchaser.

No Benefit Derived

If no benefit has been derived from the contract, nothing can be recovered. Thus, a son worked for his father on his father's farm under an unenforceable contract with his uncle. The latter was under no quasi contractual obligation to pay the value of such service, since he had derived no benefit from [223]them. Likewise one who, relying on an unenforceable contract, constructed a wood-chopping machine that was not accepted could not recover for the value of his labor and materials.

Prevented from Performance

Again, where one party by his own act or default has prevented the other party from fully performing his contract, the party thus preventing performance cannot take advantage of his own act or default, and screen himself from payment for what has been done under the contract. Thus, if one party agrees with another to work on a house the law implies that the employee owns the building in which the work is to be done. This is a part of the contract whether the house is clearly specified or not. Therefore, an employer who does not own the house, or parts with it before the work is completed, is liable to the other party.

Destruction in Course of Alteration or Repair

The destruction of a thing in the course of alteration or repair without the fault of the bailee is a case like that above mentioned. The labor and materials are expended in response to the desire of the owner of the property, and therefore it is just that he should pay for the property he destroyed. In one of the old cases a horse was sent to a farrier to be cured and was burnt before a cure was completely effected. Nevertheless, the farrier was entitled to payment for what he had done. Likewise, the owner of a ship that is destroyed by fire a few hours before the completion of repairs, cannot escape payment on the ground that he has reaped no advantage.

Illness or Death of a Contractor

As the illness or death of a contractor does not, like fire or shipwreck, deprive the other party of the fruits of what has been already done, the benefit resulting to him is more obvious, and the element of hardship is wanting that appears in many of the [224] cases. The value of his services or the materials he may have used may therefore be recovered. In one of the cases A agreed that he and his wife should live in B's house and maintain him for life. As A's wife died the contract could not be performed. Nevertheless, A recovered the value of the service he had rendered to B during the lifetime of his wife.

Wagering Contracts

Wagering contracts either by statute or judicial decision are illegal and void in most or all the states. In many of them the statute permits the recovery of the money from the stakeholder or the winner. Payment over to the winner after notice or demand by the loser is not a good defense in an action against the stakeholder. Again, the winner is liable who, when receiving the money, knows that the stakeholder has been notified not to pay it over, or has received notice not to take it.

Sunday Laws or Blue Laws

The legality of contracts made or to be performed on Sunday is determined generally by statute. Generally, when a contract is made on Sunday, or is fully performed on both sides, the money paid or other thing done in execution of it cannot be recovered. Again, one who is induced by fraudulent representations to enter into a contract which is in violation of a Sunday law is not so much in the wrong as the other, and consequently may recover a benefit he has conferred on the other party in performing the contract.

Recovery From a Partner

If a member of a firm gives a promissory note signed by the partnership name, for a debt of his own, which his partner is compelled to pay, he may recover the money from the other. So, if a carrier by mistake delivered goods to the wrong person who keeps them, and the carrier is obliged to pay for their value, he can recover the amount of the other person who thus wrongfully keeps them.

Mistake in Material Facts

[225]Whenever a person makes a payment to another under such a mistake of the material facts as to create a belief in the existence of a liability which does not really exist, the money may be recovered back. Such an obligation arises where money is paid as due on the basis of erroneous accounts, and on a true statement of account is found not to have been due. A voluntary payment with knowledge of all the facts cannot be recovered, even though there may have been no obligation to pay.

A person cannot recover money paid under a mistake of fact who has received the equivalent for which he bargained, because there is no failure of consideration. Nor is the fact immaterial that he need not, and would not have made the payment had he known the true state of things. A bank, for example, that pays the check of a depositor under the erroneous belief that it has sufficient funds, may not recover from the payee the excess to the depositor's credit. But if the purchaser of goods has paid the price, and the seller fails to deliver them, the purchaser may recover his money. And in any case, a person who has paid money under an agreement which he may rescind and does so, because there was a failure of consideration, may recover what he has paid. An action will lie against a person who sells goods as his own, but which do not belong to him, whenever the real owner claims them from the purchaser. In like manner an action will lie against a person who sells bills, notes, bonds, stock or other securities which prove to be worthless, or against a person who agrees to transfer the title to land which, for lack of title or other reason, cannot pass.

Failure of Consideration

As a rule, the consideration of a contract must totally fail to entitle a person to recover back the [226]money he has paid. If the consideration has only partly failed, the remedy, if there is any, is for a breach of the contract, and not to recover back the money he has paid. Thus, if an article is sold with a warranty of its quality, and it is not worthless, his remedy is an action to recover damages for a breach of the warranty, and not an action to recover back the money paid for the thing purchased.

No Liability Under Contract Without Consent

A liability cannot be imposed on a person without his act or consent. One man cannot force a benefit on another without his knowledge or consent, and then compel him to pay for it. "If a person," says Clark, "intentionally and knowingly performs services for another or otherwise confers a benefit on him without his knowledge, so that he has no opportunity to refuse the benefit, the law will not create a liability to pay for it. So, where a person supplies another with goods, the latter supposing that he is being supplied by another person with whom he had contracted for the goods, the law will not even imply a promise to pay for the goods." Where benefits are conferred by one person on another under such circumstances as to raise no promise in fact or in law to pay for them, he may, nevertheless, become liable by retaining them. Thus, if a person were to receive goods from another reasonably but mistakenly believing them to be intended as a gift, and, after learning of his mistake, should retain them, when he might return them, or if he should receive part of the goods purchased from another, and retain them after failure of the latter to supply the rest of the goods, the law would compel him to pay for them. And the same rule applies where benefits are in any other way received under such circumstances as to create no contractual obligation, and are retained when they should in [227] justice be returned. If, however, the benefits thus received are incapable of being returned, as where they consist of services, or of materials which have been used in repairing a house, no liability is created.

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