THEORY OF UNJUST ENRICHMENT

History

There’s been many circumstances in which law as well as justice require that a certain person be required to oblige to an obligation, although neither has he breached any contract nor has he committed a tort. To understand this with an example, a person who owns a house & some goods have been left there unintentionally by mistake is obligated to give them back. Such restoration of goods or money etc. are generally described as Quasi-contractual obligations. These quasi contractual obligations hold a rationale of their own and prevent any sort of unjust enrichment of one party of the contract in lieu of the second party.

The theory of unjust enrichment came into existence because the basis of the quasi contracts is not completely defined as such. Lord Mansfield is referred to as the founder of quasi contractual obligations and he explained that the quasi contractual obligations must try to prevent ‘unjust enrichment’, that is embellishment of one person which causes damage to the second person. In the landmark judgement of Moses v. Mcferlan (1760)[1] Lord Mansfeild  said that,‘this act of equitable justice in essence to recover money or rather the restitution of previous position is a great step forward and must be encouraged thoroughly’. In a nutshell, the basis of this type of action is that the defendant is obligated to recover the amount due to simply the law of obligation and natural justice.

Indian Contract Act provisions against unjust enrichment

The Indian Contract Law 1872[2] provides provision under the Indian Contract Act 1872 Chapter V which is headed as such, “of certain relations resembling those created by contract”. The Indian Contract Act, describes five types of quasi contractual obligations in the sections 68-72 of the act.

The first section in this regard is section 68[3] which is in regard to supply of necessaries. The section 68 of the ICA states that if one person provides necessary supplies to someone incapable of contracting on his own, he has the right to be compensated accordingly from the earnings or owned property of the incapable contractor. The incapable person here can be a minor who is under section 11[4] of the Indian Contract Act not eligible to contract. This section is or can be the basis of unjust enrichment as anybody can then supply items to minors and then in lieu of that claim for reimbursement. Therefore the definition of necessities had to be clarified.Two elements must be met in order for the minor’s estate to be liable for “necessaries,” namely:

(a) The item provided in the contract must be an essential item for the person to improve or neutralise his position in life, and (b) There must not be an adequate supply of these “necessaries” beforehand. Any item provided or supplied out of this spectrum is the act to be unjustly enriched and can be reimbursed under the doctrine of restitution in the section 65[5] of Indian Contract Act.

To describe this by an illustration, if A supplies B, whose a homeless lunatic, with bedding and clothing, he has the right to be paid from B’s estate as he is supplying the incapable to contract, B with ‘necessities’ but if he knowingly supplies B with a plasma TV and demands for reimbursement from B’s property he is unjustly enriching upon B’s incapability to contract and is not eligible for such reimbursement. In the ‘Chappel v. Cooper, (1844) 13 M&W 252’ [6]: Things necessary are those without which a person cannot reasonably exist. It includes stuff such as eatables, clothing and place to stay etc.

Section 69[7] of the ICA 1872 is for getting reimbursed for paying money on behalf of someone else due to your own interests like paying the fees of a zamindar’s land by the leaser of the land in order to avoid annulment of his lease makes the leaser eligible to be reimbursed by the zamindar so that there is no unjust enrichment. The essentials of this Section 69 of ICA are that the party must be interested in paying, must not be bound to pay & and there must be legal compulsion to make the transaction. Indian Contract Act 1872, Section 70[8] looks upon the duty to pay for non-gratuitous acts. When a person enjoys the benefit of any act done without intending to be gratuitous he is liable to pay for it. To be illustrated, if A who is a salesperson accidentally leaves his product at B’s place and B starts using them as if he owns them. B here is obligated to pay for the product. The Section 71[9] is for the finder of goods and how he cannot enrich from any good he has found. In such circumstances he is as responsible as a bailee. The Indian Contract Act 1872, Section 72[10] is for accountability of a person to whom money is paid by mistake or products are delivered by mistake or under compulsion forcefully. This also counts as unjust enrichment and the person who has received the goods or money is liable to return and repay.

Analysis of remedy

The doctrine of restitution which is under section 65 of ICA is the remedy for the sufferer. The act of restitution is simply the act to restore the previous condition of the victim through the subtraction of wealth from the unjustly enriched party of the quasi contract. This doctrine stops from making unjust gains. Section 65 primarily applies whenever a subsequent level of an agreement is revealed to be unlawful or when an agreement is declared void by one party or the other. Section 65, on the other side, would never apply if the contract was void from the start in essence void ab initio. So simply this doctrine stops the unfair gains & advantages to a party in a contract in lieu of the other party.

Conclusion

The theory of unjust enrichment is kept with high regards with the law of torts & law of contracts. The Indian Contract Act 1872 has special Section 68-72 for battling this act of unjustly enriching someone’s conditions and has also made the process fool proof with a counter-section of doctrine of restitution. Therefore this law of obligation under quasi contractual obligation is the future for every incapable person who wants to contract safely.

Author(s) Name: Dikshant Sharma (Himachal Pradesh National Law University Shimla)

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