A quasi-contract is not a true contract as it lacks mutual agreement, but serves as a legal substitute to prevent unjust enrichment. It is created by court order and typically used in disputes over payment for goods or services. Damages are limited to labor and materials to prevent unjust enrichment.
Under contract law in most jurisdictions, a quasi-contract is not considered a true contract because the parties have not mutually agreed to enter into a transaction. In essence, a quasi-contract serves as a legal substitute for a true contract and exists as a result of a court order. Quasi-contracts are typically formed for the purpose of preventing one party from unjustly enriching themselves at the expense of the other party. A quasi-contract can also be referred to as an implied contract or implied contract.
To illustrate, suppose John Doe is hired to put new shingles on a client’s roof. He spends a week at work, supervised by Suzy Smith, who owns the house, only to find that she has fixed up the wrong house. Even though she has John working at her house for an entire week, Suzy refuses to pay John because she has never entered into a contract with him. If John sues Suzy for damages, the court would likely create a quasi-contract between John and Suzy and require Suzy to pay the reasonable cost of the shingle materials and John’s labor.
With a standard contract, both parties generally agree on the subject matter and have entered into a written or oral agreement before carrying out any work. A key element of a quasi-contract, however, is that one of the parties did not actually intend to enter into the contract. Even if this mutual assent is not present, the court decides to create a contract in order to make things fair for each party. Quasi-contracts are usually created under a written court order.
A quasi-contract is distinct from a de facto implied contract. As with quasi-contracts, implied contracts are not traditional, written contracts. With an implied contract, however, the words and actions of the parties indicate that they have each agreed to enter into a transaction. This element of mutual agreement to conclude a transaction generally does not exist with a quasi-contract.
Typically, quasi-contracts are created when disputes arise over payment for goods or services. The remedy for a quasi-contract is usually limited to what is necessary to prevent unjust enrichment of one of the parties. As a general rule, this means that damages are limited to the cost of the plaintiff’s labor and materials. Profits are normally excluded as it is fundamentally unfair for one party who did not want to enter into a contract to have to pay profits to the other party.
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