Quasi Contract

Synopsis:

Introduction Contract compared Quasi Contractual Obligations Rationale Position of Quasi Contract in Indian Law Provisions under Indian contract law Quasi contracts in English law Cases Conclusion

A Quasi -contract ( Or implied-in-law contract) is a fictional contract created by courts for equitable, not contractual purposes. 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. It is invoked in circumstances of unjust enrichment, 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. 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." It "is not legitimately done, but the terms are accepted and followed as if there is a legitimate contract." Elements According to the Oklahoma pattern jury instructions, the elements of quasi-contract are: Plaintiff furnished / rendered valuable goods / services to Defendant with a reasonable expectation of being compensated; 1 . D e f e n d a n t k n o w i n g l y a c c e p t e d t h e b e n e f i t s o f t h e g o o d s / s e r v i c e s ; and2. Defendant would be unfairl y benefited by the servi ces / receiving the goods if no compensation were paid to the Plaintiff. 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.

. 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."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. 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. Examples of quasicontracts vary by jurisdiction. A painter, who mistakenly paints a house with the owner's knowledge, can sue in court to get paid. 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. For a casual job, there is almost never a written contract, but often a quasi-contract. 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. Under the general heading of the Quasi contract there has been grouped a number of cases which have little or no affinity with

contract. A simple illustration is afforded by the action to recover money paid by mistake. If the plaintiff on an erroneous interpretation of the facts, pays to the defendant a sum of money which he does not really owe, law, no less than justice, will require he defendant to restore it. But his obligation is manifestly not based upon the consent, even in the extended meaning borne by the word in the English law, and its description as a quasi contractual liability serves only to emphasize its remoteness from any genuine conception of contract. This shows that there are many situations in which Law as well as justice requires that ascertain person be required to conform an obligation, although he has not broken any contract nor committed any tort. an another example for Quasi Contract would be worthy of Quoting for the better understanding of Quasi Contract, that is if a person in whose home certain goods have been left by mistake is bound to restore them. This shows that a person cannot entertain unjust benefits at the cost of some other person. such kind of obligations are generally described, for the want of better or more appropriate name, as Quasi Contractual Obligations. This would be better to explain it up that Quasi contract consists of the Contractual Obligation which is entered upon not because the parties has consented to it but because law does not allow a person to have unjustified benefit at the cost of other party. Rationale So far as there was not an established rule of Quasi Contractual obligation the English Lawyers were content to enumerate the cases of the Quasi Contract for which they are provided a remedy as to many species of indebitatus assumpsit, but they evaded the odious task of rationalization. But as soon as the urge was felt to explore their juristic basis, controversy was born. The first and the most ambitious attempt to provide such a basis was made by Lord Mansfield in Moses v. Macfarlane in year 1760 Thus it was Lord MANSFIELD, who is considered to be the real founder of such obligations, explained them on the principle that Law as

well as Justice should try to prevent Unjust Enrichment, that is enrichment of one person at the cost of another. His Lordship offered this explanation in Moses v. Macfarlane: Facts of the case: One Jacob issued four promissory notes to Moses and the latter indorsed them to Macfarlane, excluding, by a written agreement, his personal liability on the endorsement. Even so Macfarlane sued Moses on the endorsement and he was held liable despite the agreement. Moses was thus compelled to discharge a liability which he had excluded and, therefore, sued to recover back his money from Macferlan.He was allowed to do so. After making the defendant liable to restore the money Lord MANSFIELD continued as follows: After stating that such money cannot be recovered where the person to whom it is given can retain it with a safe conscience, he stated that here it lies for the money paid by mistake; or upon a consideration which happens to be fail; or for money got through imposition; or extortion; or oppression; or for an undue advantage taken off the plaintiffs situation, contrary to laws made for the protection of the persons under those circumstances. In one word the gist of this kind of action is that the defendant, upon the circumstances of thecae, is obliged by ties of the natural justice and equity to refund the money. Position of Quasi Contract in Indian Law Chapter V of the Indian contract Act 1872 deals with the situations qualifying the quasi contractual obligations under the heading Of certain relations resembling to those created by contract. The chapter avoids the words quasi contract, and in view of the clear statutory authorization of the courts in India is not hindered in allowing relief under the different sections of the Act by the theoretical considerations concerning quasi contracts. But the English cases do provide valuable guidance: Not only as to the scope of the relief

But also as to the way the provisions should be interpreted to keep them in tune with the changing notions of justice. Provisions under Indian contract law: Section 68 to 72 of the Indian Contract Act 1872 provides for five kinds of quasi-contractual obligations they are as follows:1. Supply of necessaries [sec. 68]2. Payment by interested person [sec. 69] 3. Liability to pay for nongratuitous acts [sec. 70]4. Finder of goods [sec. 71]5. Mistake or c oercion [sec. 72] Supply of Necessaries: - [SECTION 68] Where necessaries are supplied to a person who is incompetent to contract or to someone who is legally bound to support, the supplier is entitled to recover the price from the property of the incompetent person. Section 68 reads as under:If a person, incapable of entering into a contract or anyone whom he is legally bound to support, is supplied by the another person with necessaries suited to his condition in life, the person who has furnished such supplies is entitled to be reimbursed from the property of such incapable person. Ingredients of the section:According to the language drawn upon by section 68 we got to know the following essentials to apply this section.1) Necessaries are being supplied,2) Necessaries so supplie d must be suited to the condition of life of that person to whom they are supplied,3) Necessaries are supplied to a person who is incapabl e of entering into a contract oranyone whom he is legally bound to support,4) The reimbursement is to be claimed from the propert y of that incapable person.Examples:-a) A, Supplies to B, a lunatic, with the necessaries suitable to his condition in life. A

is entitled to be reimbursed from Bs properties) A, supplies the wife and children of B, a lunatic, with the necessaries suitable to their conditions in life. A is entitled to be reimbursed from Bs property

Payment by interested person: - [SECTION 69] Reimbursement by a person paying money due by another, in payment of which he is interested: - A person who is interested in the payment of money, which another is bound by law to pay, and who therefore pays it, is entitled to be reimbursed by the other. Illustration:-B holds a land in Bengal, on a lease granted by A, the Amender. The Revenue payable by A to the Government being in arrears, his land is advertised for the sale by the government. Under the Revenue Law, the consequences of such sale will be the annulment of Bs Leases, to prevent the sale and annulment of his own lease, pays to the government the sum due from A. A is bound to make good to B the amount so paid. Conditions for Liability: The conditions for liability under this section may now be stated: 1) Payer must be interested in making payment: The first condition for establishing the liability is that the Plaintiff should be interested in making payment. The interest which the plaintiff seeks to protect must be of course legallyrecognizable.2) But should not be bound to pay:The second essential condition is that it is necessary that the plaintiff himself should not be bound to pay. He should only be interested in making the payment only for the purpose of protecting his own interest. Where a person is jointly liable with others to pay, a payment by him of the others share would not give him a right of recovery under this section.3) Defendant should be under a legal compulsion to pay:-

Thirdly the defendant should have been Bound by Law to pay the money. The words bound by law have been held after some hesitation, to mean bound by law or by contract. It is not necessary that the liability should only be statutory. In a judgment of Privy Council it Was held that it is enough that the defendant at the suit of any person might be compelled to pay4) Payment should be made by one party to some other person:Lastly the Plaintiff should have made payment to some other person and not to himself. Liability to pay for Non Gratuitous Acts: - [SECTION 70] Obligation of a person enjoying benefit of a non-gratuitous act :- where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in this respect of, to restore, the thing so done or delivered.Illustrations:a) A, a tradesman leaves his good at Bs place/home by mistake. B treats the goods as his own. He is bound to pay A for them) A saves Bs property from fire. A is not entitled to compensation from B, if the circumstances shows that he intended to act gratuitously. Conditions of Liability under the section:a) A person should lawfully do something for another person or deliver something to him;b) In doi ng the said thing or delivering the said thing he must not intend to actgratuitously; andc) The other person for something is done or to whom somethi ng is delivered must enjoythe benefit thereof. Finder of Goods: - [SECTION 71]

Responsibility of finder of goods: A person, who finds goods belonging to some another and takes them into his custody, is subject to the same responsibility as a Bailey. Thus in respect of duties and liabilities, a finder is treated at par with Bailey. The finders position is therefore considered along with bailment.

Mistake or Coercion: - [SECTION 72] Section 72 deals with the payments made or things delivered under mistake or coercion. Liability of a person to whom money is paid, or things delivered, by mistake or under coercion: - A person to whom money has been paid, or anything delivered, by mistake rounder coercion, must repay or return it. Illustration:A and B jointly owe 100 rupees to C. A alone pays the amount to C and B, not knowing the fact pays another 100 rupees to C. C is bound to repay the amount to B. A railway company refuses to deliver up certain goods to the consignee except upon the payment of an illegal charge of carriage. The consignee pays the sum charged in order to obtain the goods. He is entitled to recover so much of the charge as was illegally excessive. Provisions under Indian contract law Money paid under mistake is recoverable irrespective of the fact that whether the mistake is of fact or of law. The Payment by Mistake in section 72 must refer to a payment which was not legally due and which could not have been enforced: the Mistake is on thinking that the money paid was due when in

fact, it was not due. There is nothing in section 72 to relate with that whether the mistake is of law or of a fact.

QUASI CONTRACTS IN ENGLISH LAW: PAYMENTS TO THE DEFENDANTS USE Two principles seem to govern this kind of quasi-contractual liability .one of them is that the payment should have been made under pressure and not voluntarily of his liability by the payment made by the plaintiff. The kind of compulsion or pressure that the law recognizes for the purpose of this remedy is evidenced by exall v partridge(1799)8 terem rep 308: (1775-1802)all er rep 341. .here the plaintiff had left the carriage upon the premises in which defendant was as the tenant .the landlord has seized the goods on the premises including carriage for nonpayment of rent .the plaintiff paid the outstanding rent to get back the carriage and then sued the defendant for the amount. He was held entitled to it. Similar cases are brooks wharf & bull wharf ltd v. gooman bros(1937) 1kb 534.,monmouthshire country council v. smith(1956) 2 all er 800,809;affirmed in,(1957) 2 qb 15 : (1957) 2 wlr 33,source:contracts& specific relief by avatar singh ,pg:575,576,577 Refund of Tax Money paid without being due:The Supreme Court in its decision in Sales tax Officer, Banaras v Kanhaiya Lal Mukund LalSaraf has accepted this interpretation of section 72.A certain amount of the Sales Tax was paid by a firm under the U.P. Sales Tax Law on its forward transactions and subsequently to the payment; the Allahabad High Court ruled the levy of the sales tax on such transaction to be ultra virus. The firm sought to recover back the tax money And as far as English, American and Australian Laws and their contentions are concerned they do not allow the payments made under mistake of law to be recovered.

Coercion:The word coercion used in this section is used in the general sense and not as defined in section 15. Thus the money paid under pressure of circumstances, such as prevention of the execution of a decree on a property in which the party paying is interested, may be recovered even though coercion as defined in sections 15 is not established. Conclusion:The principle of quasi contract is often ignored but still it holds a very important place, since the principle is grounded on the principles of justice and equity. Despite the fact that Quasi Contract is molded in the Indian Contract Act under a new name, the basic nature and essence of the principles of the remains the same without any drastic change. Thus, Quasi contract forms an integral of the contracts Act and it definitely comes to an aid of the victim when the person enriched unjustly over the former. Cases WOOD V. BOYNTON (1885) Wood v. Boynton, 64 Wis. 265, 25 N.W. 42 (1885) Facts: P. owned a rough and uncut stone she did not know the identity of; although she thought it might be a topaz. P. sold said stone to D., who also did not recognize the identity or value of the stone, for $1. Upon finding out that the stone was actually a very valuable diamond, P. tendered the D. $1.10, and demanded return of the stone. D. refused, and so P.brought suit. Nature of the Risk(s): In the absence of explicit contractual statements otherwise, the seller assumes the risk that he under-charged for an item, and the buyer assumes the risk that he over-paid for an item. Issue(s): Is the P. entitled to rescind the sale because she was ignorant as to the hypothetical fair market value" of the stone she sold D.?

Holding(s): "In the absence of fraud or warranty, the [hypothetical] value of the property sold, as compared with the price paid, is no ground for recession of the sale."Reasoning: Neither the P. nor the D. had any knowledge that the stone was a diamond, so there was no fraud. In addition, there was no agreement of warranty, either stated or implied. Therefore, the risk was equally borne by both the buyer and the seller, and the seller could not rescind the sale. ANDERSON V. BACKLUND (1924) ANDERSON v. BACKLUND. Supreme
Court of Minnesota. 159 Minn. 423; 199 N.W. 90 (1924).

Facts: P. was having difficulty "making ends meet" because the crop was poor on the farmland he leased from D. P. alleges that D. agreed to provide enough water for 100 additional head of cattle, if he would put them to pasture on his land. The water supply failed, however, and so the then 174 head of cattle lost value due to starvation, and the P. was damaged in the sum of $2,500.Nature of the Risk(s): Both parties assume the risk of fulfilling exactly the terms of the contract, however absurd or improbable, as long as it remains possible to fulfill that contract. Issue(s): Was there a contract between P. and D.?Holding(s): "Contracts must be in certain terms and not so indefinite and illusory as to make it impossible to say just what is promised" .Reasoning: The language between P. and D. was taken as advice and not a contract, and so the court concluded there was no contract .Notes: The court overlooked the fact that D. was aware that P. bought the cattle, as the D. had induced him to do by relying on D.'s "advice". This would probably constitute a contract. SOMMERS v. PUTNAM BOARD OF EDUCATION (1925) Sommers
v. Putnam Bd. of Educ. (1925) 113 Ohio St. 177, 148 N. E. 682

Facts: P. is a father of high school students. D. is the school board. P. requested D. provide high school facilities within 4 mi. of his house, as was the local public law. D. refused, and so P. transported his children to school for 1 semester, after which he presented the bill for transportation to D. D. refused to pay, and P. sued. D. demurred claiming no cause of action, and lower court sustained. P. appealed to this court Nature of the Risk: When a person does not perform his obligations, and someone else fulfills his obligation for him, he may be held liable for a "quasi-contract" because he was benefited. Issue: Was a there a contract between the father and the school board, solely because the father benefited the school board by taking his children to school? Holding: Yes. When a person makes an "act of beneficial intervention" in discharging the duties of another, the parties resultantly enter into a contract .Reasoning: The court reasoned that the school board had benefited inequitably. The father was required to make sure that his children were in school, so he was justified in performing the school's duties. Thus, there was a contract because of the beneficial intervention. UPTON-ON-SEVERN RURAL DISTRICT v. POWELL (1942)
Upton-on-Severn Rural Dist. Council v. Powell, (1942) 1 All E.R. 220

Facts: D.'s barn was on fire and he called the local Upton police chief and asked him to send "the fire brigade". The Upton fire brigade showed up and began to put out the fire. While the fire was still burning, a neighboring fire chief came by and informed all that the farm was really in his district, and so the Upton fire brigade was not under obligation to put it out for free. When the D. refused to pay for the service, they sued. Nature of the Risk: You may contract by implied promise when you ask for assistance in protecting your property .Issue: Was there a contract between the fire brigade and the farmer by implied promise of the farmer to pay if payment was required? Holding: Yes. Parties create a

contract by implied promise when one renders service that requires payment, even though the other may not be aware that the service requires payment. Reasoning: The court reasoned that the fact that neither intended to enter into a contract was irrelevant. The contract was created because the service was performed and therefore there was an implied promise to pay. NOBLE v. WILLIAMS (1912) Noble v. Williams
150 Ky. 439, 150 S.W. 507 (1912)

Facts: P.'s were teachers who were hired to teach public school. The D., school board, failed to pay the schoolhouse rent, or furnish necessary classroom materials. The P.'s allege that They were therefore required to pay for the supplies themselves, and so they sought to recover their costs in furnishing the schoolhouse. D. demurred and circuit court sustained the demurrer. Nature of the Risk: When a person does not perform his obligations, and someone else fulfills his obligation for him, he may be held liable because he was benefited. Issue: Was a there an implied contract between the teachers and the school board, solely because the school board benefited from the teachers' actions? Holding: No. "No man, entirely of his own volition, can make another his debtor. Reasoning: The court reasoned that the teachers had no right to provide the supplies themselves and then demand payment, because they would be forcing the school board into a contract that the school board did not intend. Notes: This case is in sharp conflict with Sommers where a school board was found to have contracted when someone fulfilled their obligations for them. COTNAM v. WISDOM (1907) Cotnam v. Wisdom
Supreme Court of Arkansas, 1907 83 Ark. 601, 104 S.W. 164

Facts: Co-P.'s are physicians who performed an emergency surgery in an attempt to save the life of an accident victim who had fallen from a street car. The victim never regained consciousness and later died. The D. is the administrator of the victim's estate. P.'s are suing for the cost of performing the surgery, which they allege to be customarily dependent on the victim's ability to pay. D. claims that since the victim never gained consciousness, there could have been no contract (not very good argument), and further say that the ability of the victim's estate to pay should have no bearing on the value of the services provided. Nature of the Risk: A person, who commits resources by performing a service in the absence of the other committing resources, runs the risk that he might not be compensated for his performance. Issue: 1. was there a contract between the unconscious victim and the physicians? And 2. If so, what was the value of the services they provided .Holding: Yes. 1. A person who receives medical care while in an injured and helpless position is liable for payment by way of implied contract when such medical care is provided in good Faith. 2. The value of medical services rendered to a victim who cannot negotiate is reasonable compensation for the services rendered. Reasoning: 1. although there was no negotiation, no agreement or "meeting of the minds, these are NOT requirements for the creation of a contract. The physicians provided competent medical care in good faith. The victim received a benefit which requires equitable compensation. 2. The victim could not have contemplated the charges since him was unconscious, and so this is an implied contract without a negotiated price where the only equitable determination of price would be the fair value of the service provided. HILL V. WAXBERG (1956)
Hill v. Waxberg, 237 F. 2d 936 - Court of Appeals, 9th Circuit 1956

Facts: Appellant is a property owner who asked Appellee to assist him in securing a FHA guarantee for a construction loan, with the mutual understanding that the Appellee would be awarded the contract for construction if the FHA guarantee came through. In securing the FHA guarantee, Appellee incurred many costs which he expected would be offset by the profits from the construction contract. However, once the FHA guarantee came through, negotiations on the construction contract broke down, and Appellee sued for his costs and the value of his services, without which the Appellant would not have secured the FHA guarantee. Appellant appealed stating the judgment was /excessive, and that the court in correctly instructed the jury. Nature of the Risk: The Appellee risked that he would have committed his time and money better had he not relied on the promise of a future construction contract. In constructing an implied in law" contract, the court shifted that risk to the Appellant. Issue: 1. is there a contract? 2. If so, how should the damages is measured? Holding: 1. Yes. An implied in law contract results when one renders service at the request of another, regardless of whether he expects his payment therefore to be in the form of immediate payment or future profits from an ensuing contract. 2. The damages should be limited to the amount of the unjust enrichment .Reasoning: The court distinguished between "implied in fact" contracts, where both parties acted as if they had contracted, and "implied in law" contracts, where one party was unjustly enriched at the expense of the other. For "implied in fact" contracts, the court enforces what the contract would have been, and thus awards compensatory damages measured by the going contract rate. In "implied in law" contracts, the court limits the damages to the amount of the unjust enrichment. The court stated that either might apply in this case, but Since the lower court had decided that it was an implied in fact contract, the damages would be the Apelless costs and fees.

MARTIN V. CAMPANARO (1946) Martin v. Campanaro, 156 F. 2d

127 - Circuit Court of Appeals, 2nd Circuit 1946

Facts: P. was a bus driver for a company that contracted year-toyear with its drivers. In the year in question, the contract had not been renewed, and the union was negotiating for higher wages while the drivers continued to work, in anticipation of being paid back wages. The labor negotiations broke down, and the bus company fell bankrupt and into the hands of D. who refused a gov't order to pay back wages at the higher rate. P. sued for back pay at the higher wage rate .Nature of the Risk: In the absence of a contract, the P. bore the risk that he would only be paid at the previous rate after performing services that he expected would be paid at the higher wage rate. An implied in fact contract would shift that risk to D.Issue: 1. was there a contract? 2. If so, what should the nature of the damages be? Holding: 1. Yes. A contract implied in fact arises from the "presumed" intention of the parties when their actions indicate that both considered the contract to be in existence. 2. The damages for implied in fact contracts should be the reasonable value of the services .Reasoning: The Court of Appeals agreed with the lower court that there was a contract" implied in fact", however they reversed the decision that the amount of the services should be measured at the old rate. They stated that the reasonable value of the services should be determined by taking into account the fact that the union was negotiating new wages. Austin v. Burge (1911) Austin v. Burge (156 Mo.App. 286, 137 S.W. 618
(Mo.App. 1911)

Facts: D. received and read a newspaper over the course of several years. He had at onetime subscribed for a two-year period, but claims that after the expiration of those two years, he requested

that service be stopped. P. is the newspaper owner, who claims he never received notice of stoppage. Nature of the Risk: In the absence of a contract, the P. assumed the risk that D. would not pay for his newspaper .Issue: Was there a contract implied by the conduct of the D. in reading the newspaper? Holding: One who accepts an unsolicited newspaper, and reads it, is liable for the cost of the newspaper subscription if it is understood that the newspaper is not free. Reasoning: The court stated that although one cannot be forced into a contract unilaterally by the newspaper company, the D.'s actions of reading the newspaper, which he knew was not free, implied that he had to pay for it. The court constructed a quasicontract due to the D.'s deriving benefit, and held D. liable for the subscription price. (Restitution Interest). Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour, Ltd., (1943) Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd. , [1942]
UKHL 4, [1943] AC 32, [1942] 2 All ER 122

Facts: The P. is a polish company who expressly contracted with the D. to buy some machines and have them delivered to Poland. They were supposed to have made a down payment of 1/3 upon order, but paid somewhat less than that. The D. began the construction of the machines. Poland was subsequently invaded by Germany, which made it impossible to deliver the machines. The P. sued to get his down payment back .Nature of the Risk: Standard sale of goods risks .Issue: Is the subsequent impossibility of performance by the D. sufficient to release the parties from further contractual liability, as well as entitle the P. to recover any down payment, even though the D. had already gone to some expenditure to make the machines? Holding: Yes. Where the performance of a contract has begun, but further performance of a contract becomes impossible due to events

unanticipated by the parties and beyond their control, the contract fails for lack of consideration, and any partial payment by the buyer is refundable .Reasoning: The court expressly overruled Chandler v. Webster, and claimed that the P. was entitled to recovery, not by release by implied condition, but that failure of consideration prevented the contract from being formed at all. The court reasoned that the contract was for delivery, and so when delivery became impossible, the whole contract failed for lack of consideration. Thus, they awarded restitution damages to the P. on a theory of quasi-contract because the whole contract had failed. [The promise by the D. to deliver was an unconditional one. Thus, the risk of invasion preventing delivery was never reallocated to the P. Under that view, this is an express contract, entitling the P. to expectation damages. But these would be hard to calculate. The burden would be on the P. to demonstrate how much it would have made if the machines were actually delivered. However, they only sued for their down-payment. It seems that the announced theory of the case - quasi contract, was a means to get the theory to match the request for reimbursement.]Notes: In English law, there has been a Law Reform (Frustrated Contracts) Act which attempts to make an equitable adjustment of the losses of the parties when performance is Frustrated. It attempts to protect a reliance-type interest of the party who has begun partial performance (as in Fibrosa), as well as the restitution interest of one who has pre-paid for services which have not yet been performed. The U.S. law has taken a less for giving approach. Letting the losses fall where they may unless the parties have contracted otherwise. For example the holding in Bennet: "[W]here a party, by his own contract, creates a duty or charge upon himself, he is bound to make it good if he may, notwithstanding any accident by inevitable necessity, because he might have provided against it by his contract."

Jacob & Youngs, Inc. v. Kent, (1921) Jacob & Youngs v. Kent Court of
Appeals of New York, 1921. 230 N.Y. 239, 129 N.E. 889

Facts: The P. built a house for the D. The contract specification called for wrought iron pipe made by Reading. The P.'s subcontractor delivered Reading pipe for the first 1,000 feet of pipe, but thereafter delivered pipe from other manufacturers. When the building was completed, the D. took possession and noticed that the pipe was not made by Reading. The P.'s architect refused to sign off the final certificate, and the P. withheld payment. There was evidence that the pipe actually used was of the same quality as Reading pipe, and that the cost of replacing the entire plumbing with the Reading pipe would have been exorbitant because it would have required rebuilding the house .Nature of the Risk: The D. risked that he could have a better house for less money. The P.risked that he could be paid more for his building services .Issue: Is the omission of Reading pipe in the house a cause for forfeiture of the final contract payment? Holding: No. An omission which is trivial and innocent does not necessarily result in a forfeiture, but rather may be remedied by the payment of damages .Reasoning: The majority [Cardozo] reasoned that the omission of the pipe was not willful, and furthermore, there was evidence that the pipe actually used was of the same quality. The brand name of the pipe was not crucial to the building of the house, and it would be extremely burdensome on the P. to require him to rebuild the plumbing. Although the P.could not simply substitutes his own judgment for what is stipulated in the contract, the deviation was so minor as to be considered a covenant and not a condition. The measure of damages, therefore, was not the price of installing new plumbing, but rather the difference in value between what was actually installed and the Reading pipes. Dissent: The dissent [McLaughlin] stated that the D. was entitled to exactly the kind of pipe that was stated in the contract, whether the other kind was just as good, even if it was

Simply a whim. The dissent concluded that the deviation was not innocent, and whether it was intentional or unintentional, it should be treated as intentional because it was careless .Otherwise, parties would be motivated to deviate from contracts intentionally, and the law would suffer. Notes: 2. Cardozo conceded that the D. could have used explicit terms to evidence his desire to have exactly what was called for in the contract, but he felt that the deviation was not significant. However, there was an explicit clause in the contract that stated that all work not exactly to spec would be torn down and rebuilt correctly. 3. There was evidence that the use of the brand name "Reading" was as a generic reference to any high quality wrought iron. The D. may have seized upon this event to express other dissatisfactions with the P.'swork. 4. Both opinions cited Spence v. Ham, where the court held that the partially performing party had to prove not only the value of what he had done, but also the value of what remained to be done. In the instant case, the P. clearly had not met the burden of proof as to the difference in value between the actual pipes and the Reading pipes. However, Cardozo got around this by stating plainly that his conclusion was that it was either "nominal or nothing." In Mass., the courts have adopted a quasi- contract theory to deal with substantial performance cases, so the P. does not have to prove the difference in value, but only the value of his performance. Under either theory, the cases come out the same way. 5. The absence of the architect's certificate probably is not essential to the outcome of the case because the architect could be acting unreasonably. It may not have been critical to the parties' consideration. 6. Cardozo stated that the "cost of replacement" is the general rule for the D.s remedies in a case of substantial performance, but that the difference in value" rule is used when the "cost of replacement" would result in unjust results. Part of this determination involves whether the builder was warned by the contractor of the importance of strict adherence .