Does the Enforcement of Quasi Contracts Infringe on the Liberties of a Citizen?

Research Paper

Does the enforcement of quasi contracts infringe on the liberties of a citizen?

(Definition)Quasi contracts are a controversial and unclear subject. A quasi contract can be defined only after a definition of the characteristics of the alternatives: the terms of an express contract are written; and in implied contracts, based on conduct and surrounding circumstances. Quasi-contracts go one step further – not based on what is intended, but what occurs after the fact, and tries to designate a liability around that concept. One may visualize these three as the spectrum of contract law, where enforcement of express contracts is straightforward, and quasi-contracts are nebulous and problematic to enforce.

(Purpose)This paper will provide a summary analysis of quasi-contracts in order to better understand their controversial existence in legal doctrine. First, an analysis into the definition of a quasi-contract and its beginnings will provide a foundation for understanding. Second, an analysis of the main arguments for and against quasi-contracts will allow a questioning of the implications of their use. Third, a comparison of landmark cases related to the concept will show the proof in results when quasi-contracts are applied. Finally, an economic application of quasi-contract enrichment quantification will prove that this enforcement is actually good for society, and does not infringe on the liberties of a citizen.

At the core of every contract, it is essential for a meeting of the minds to occur, based on the intention of the parties. If there is no intention or meeting of the minds, then a contract does not exist. Thus quasi-contracts lay on the outer edges of this contract spectrum, where a contract does not truly exist, and yet the parties involved are subject to what seems like the judicial application of contract standards of liability. Even definitions of quasi-contracts are problematic: “an instance in which someone receives a benefit and later a court creates or constructs a fictitious contract between the benefit-giver and the benefit-recipient, although no actual contract existed nor were promises made” (Swygert, Yanes 22). It may be misleading to use the term contract, since by definition it is the very lack of a contract that portends quasi-contract treatment. Regardless, a quasi-contract, which is not implied by the parties, and therefore is independent of intention, is not based on terms, surroundings, or intention. Quasi-contracts are based on the need for a correction of an imbalance due to unjust enrichment.

The concept of unjust enrichment is rooted in the belief of one party, who has been affected by the other, so much so that they feel something is due to them. In essence, the right for the plaintiff to recover is established on their principles and beliefs. For example, in the case of Nobel v. Williams, the plaintiffs argued that because they spent their own money in order to conduct classes, the school board should have to pay for their expenditures. The school board argued that they did not request this from them, or promise payment. Who should pay? Here one may begin to suspect the controversy of the situation, since it is these very unclear principles and beliefs that shape the finding of the court.  Principles and beliefs are difficult to measure.

Another one of the drawbacks to quasi-contracts is the problem of an infringement on citizen’s rights. There is some confusion about whether a quasi-contract is actually a contract or not, since the imposition of a duty implies that a contract exists in some kind of form.  There is a strong argument that by enforcing a duty without actually having a contract is a violation of a citizen’s liberties. Citizens have the right to make their own contracts, and the justice system works with them to enforce this contract. The constitution does not give this power to judges, to quote from Sceva v. True: “To sit in judgment upon [someone] and enforce their own contract… is judicial usurpation. The constitution gave the court no such power. The court has no power to make contracts for people…” Of course the counter-claim would be, then, that a quasi-contract is not, in fact, a contract at all, but a remedy. But in the case of no contract, where one party is benefitted unjustly, what is the best course of action? Should we, as a society, allow unjust enrichment to occur for the sake of one citizen’s rights? Should we sacrifice one to keep the other sacrosanct?

To quote one opponent:  “My analysis, which supports the idea that judicial decision-making is indeterminate, is rendered vulnerable by our experience of being able to speculate successfully about how at least some cases will come out.  One response is that our ability to speculate has less to do with the determinacy of doctrine than with our sensitivity to cultural values and understandings as they impinge on and are created by our decision makers” (Dalton 5). In fact, the argument that judges are not necessarily impartial and fair is absolutely true.  Adding to the possible damage is the imperfect nature of utilizing the court system, where a judge decides what the plaintiff or defendant is then required to do. Here is the nature of the controversy revealed, because the parties did not intend to assume an obligation by their actions, and yet a verdict is being forced upon him by an external third party. How can a grey area be enforced if it is not defined by the parties at first?

However, since the parties cannot come to an agreement outside of a courtroom, by action they are publicizing the issue, leaving them open to third party influences. They allow the public system of law to dictate what will follow.  This gives them limited control over what part of the case they want to become public and their version of events, and they lose autonomy in the realm of the courtroom.  Whatever bias or principle the participants use to make their decision is a transaction cost or externality chosen by the plaintiff, who has demanded that the case be heard in a courtroom rather than negotiated privately. Thus the issue of maintaining a private or public understanding of a quasi-contract is moot; rather, the plaintiff has forced the public to have bearing on the issue, and must accept the external influences that may factor into a judges’ decision.

The most efficient and fair, even perfect method would be if the parties negotiated a compromise in regard to the unjust enrichment by themselves, thus making any public, judicial interference unnecessary.  Without the addition of a third party, they could achieve a balance once again. From an economic perspective, the addition of a third party also poses additional transaction costs. According to Bouckaert and Geest, “could it not be argued that the costs of quasi contracts are higher because a third party (the judge) has to be paid to write the “contract” instead of the parties? As far as quasi contracts are concerned, these costs become higher the more a third party tries to make perfect compensation” (3).