Quasi-Contract vs Restitution: The Relationship Between Chapter V of the Indian Contract Act, 1872 and the Wider Law of Restitution, the Decline of the Implied Contract Theory, and Restitution for Wrongs

Quasi-contract and restitution are often used as though they meant the same thing, and the relationship between them is one of part to whole. Quasi-contract is a historical category: a group of claims that the common law fitted into contractual forms of action because there was nowhere else to put them, and which the Indian draftsmen collected in five sections of Chapter V. Restitution is the modern substantive subject: the body of law that reverses unjust enrichment, wherever it arises and whatever the procedural vehicle. Chapter V is therefore a partial codification of restitution, and a great deal of restitutionary law in India lies outside it.

1. The Two Expressions

	Quasi-contract	Restitution
What it is	A historical category of claims treated as if they arose from contract	A substantive body of law reversing unjust enrichment
Source in India	Chapter V, Sections 68 to 72, and Sections 64 and 65	Judicial doctrine, statutory provisions across several enactments, and equity
Organising idea	The forms of action; the fiction of an implied promise	Enrichment of the defendant at the plaintiff's expense which it is unjust to retain
Scope	The five enumerated situations and their statutory neighbours	Wider: also tracing, constructive trusts, subrogation, restitution for wrongs, and statutory restitution
Measure	The benefit received	The benefit received, and in some cases the profit made by a wrongdoer
Is it closed?	Yes, so far as the Act enumerates the situations	No. It develops as new categories of unjust factors are recognised

2. The Decline of the Implied Contract Theory

The older explanation of quasi-contract was that the law implies a promise to repay. It was a procedural device: the common law forms of action required a claimant to fit his case into an existing writ, and the action of indebitatus assumpsit required a promise, so one was invented. Lord Mansfield used it in Moses v. Macferlan, (1760) 2 Burr 1005, saying that the defendant was obliged by the ties of natural justice to refund, and that the law implied a promise where none was made.

The fiction breaks down where the defendant cannot promise. Section 68 imposes liability precisely on a person incapable of contracting, so no promise, real or implied, is conceivable.
It breaks down where the defendant has expressly refused. A promise cannot be implied against a person who has said in terms that he will not pay, yet the obligation still arises.
It invites the wrong questions. If the liability were contractual, it would need consideration, capacity and consent, none of which Chapter V requires.
The Indian Act never adopted it. The chapter is headed relations resembling those created by contract, which acknowledges the resemblance and denies the identity.
The courts have discarded it. In Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour Ltd., [1943] AC 32 Lord Wright described the remedies as based not on contract but on the prevention of unjust enrichment, and the Supreme Court has held the liability under Section 70 to be statutory and independent of contract in State of West Bengal v. B. K. Mondal & Sons, AIR 1962 SC 779.

3. Restitution as a Substantive Subject

📖 Lipkin Gorman v. Karpnale Ltd., [1991] 2 AC 548 (HL)

Facts: A partner in a firm of solicitors, who was a compulsive gambler, drew money from the firm's client account without authority and gambled it away at a club. The firm sued the club for the money it had received. The club had given no consideration recognised in law for the money, gaming contracts being void, but it had in the meantime paid out winnings to the gambler.

Held: The House of Lords allowed the claim in part and, in doing so, took two steps of lasting importance. It recognised unjust enrichment as a substantive basis of liability in its own right, rather than as a collection of claims held together by a procedural fiction; the firm could trace its money into the club's hands and recover it as money had and received. And it recognised the defence of change of position, holding that a defendant who has in good faith so altered his position that it would be inequitable to require him to make restitution in full is protected to that extent, so the club was liable only for the net sum it had retained.

Ratio: Unjust enrichment is a substantive principle of liability and not a fiction. The claim is subject to the defence of change of position, which protects a good faith recipient who has irretrievably altered his position.

4. Restitution Outside Chapter V

Sections 64 and 65 of the Act, requiring restoration on rescission of a voidable contract and where an agreement is discovered to be void or a contract becomes void. Section 65 is the sole route to adjustment on frustration in India.
Section 144 of the Code of Civil Procedure, 1908, requiring restitution on the reversal or variation of a decree, which is the procedural expression of the same principle.
Refund of unauthorised exactions, under Article 265 of the Constitution read with Section 72, as qualified by Mafatlal Industries Ltd. v. Union of India, (1997) 5 SCC 536.
Tracing and following in equity, and the constructive trust, by which a claimant follows his property or its product into the hands of a recipient.
Subrogation, by which a person who discharges another's liability stands in the creditor's shoes, recognised in the law of suretyship by Section 140 and in insurance.
Restitution for wrongs, considered below.
Specific statutory restitution, such as Section 33 of the Specific Relief Act, 1963, which permits the court to require restoration of a benefit where a defendant successfully pleads incompetence.

Chapter V is one part of a larger body of restitution

5. Restitution for Wrongs and Waiver of Tort

A distinction is drawn within restitution that has no counterpart in quasi-contract. Unjust enrichment by subtraction describes the ordinary case: the defendant's gain came from the claimant, as where money is paid by mistake. Restitution for wrongs describes the case where the defendant has committed a wrong and made a profit by it, and the claimant seeks the profit rather than compensation for his loss.

The claimant may waive the tort and sue in restitution. Where goods are wrongfully taken and sold, the owner may sue in conversion for the value of the goods, or may claim the proceeds as money had and received.
This is advantageous where the wrongdoer profited by more than the claimant lost, which is the whole point of the election.
Waiver of tort is a choice of remedy and not a forgiveness of the wrong. The claimant does not condone the conversion; he elects an alternative measure of recovery.
Indian courts have applied the principle, and the Supreme Court in Indian Council for Enviro-Legal Action v. Union of India, (2011) 8 SCC 161 required a party to disgorge the benefit obtained from the pendency of proceedings, which is restitution directed at gain rather than at loss.

6. Why the Distinction Matters in Practice

Question	Answered by quasi-contract	Answered by restitution more widely
Can I recover money paid by mistake?	Yes, Section 72	Yes, and tracing may be available if the money can be followed
Can I recover for work done without a contract?	Yes, Section 70 if the benefit was enjoyed	Also through subrogation or a lien in appropriate cases
Can I recover a prepayment after frustration?	Not under Chapter V	Yes, under Section 65, and the principle of total failure of consideration in Fibrosa
Can I claim the profit a wrongdoer made?	No	Yes, by restitution for wrongs, or by waiving the tort
Can I follow my property into a third party's hands?	No	Yes, by tracing and the constructive trust, subject to the bona fide purchaser defence
Is change of position a defence?	Recognised in principle	Yes, and stated authoritatively in Lipkin Gorman

⚠ Chapter V is not exhaustive of restitution in India

It is a common error to treat Sections 68 to 72 as the whole of Indian restitution law, and to conclude that a claim which does not fit one of the five sections must fail. It need not. Sections 64 and 65 of the Act, Section 144 of the Code of Civil Procedure, 1908, Section 33 of the Specific Relief Act, 1963, the law of subrogation and tracing, and the general principle against unjust enrichment recognised by the Supreme Court all operate outside Chapter V. The correct approach is to identify the unjust factor, such as mistake, compulsion, total failure of consideration or a wrong, and then to find the provision or principle that gives a remedy for it.

7. The Position Stated Shortly

Quasi-contract is a historical category; restitution is the substantive law of unjust enrichment, and Chapter V is a partial codification of it.
The implied contract theory of Moses v. Macferlan was a procedural fiction and has been abandoned.
It fails wherever the defendant cannot promise, as under Section 68, or has expressly refused.
Fibrosa and B. K. Mondal place the liability on unjust enrichment and on statute respectively, and not on contract.
Lipkin Gorman recognises unjust enrichment as a substantive basis of liability and establishes the change of position defence.
Restitution outside Chapter V includes Sections 64 and 65, Section 144 of the Code of Civil Procedure, 1908, tax refunds under Article 265 and Section 72, tracing, subrogation and Section 33 of the Specific Relief Act, 1963.
Restitution for wrongs allows a claimant to seek the wrongdoer's gain rather than his own loss, and waiver of tort is the election of that measure.
Indian Council for Enviro-Legal Action applies disgorgement of a benefit obtained through the pendency of proceedings.
Chapter V is not exhaustive, and a claim that does not fit one of the five sections may still succeed on another restitutionary basis.

8. Related Topics and Provisions

Topic or provision	Connection
Quasi-Contracts under Sections 68 to 72	The chapter, its basis and the nature of the liability
Doctrine of Unjust Enrichment	The requisites, the defences and the Indian authorities
Money Paid or Thing Delivered by Mistake or Coercion under Section 72	The widest of the five sections and the tax refund cases
Remission and Restitution under Sections 63 to 66	Sections 64 and 65 in detail
Doctrine of Frustration under Section 56	Section 65 as the route to adjustment
Sections 68 to 72, Indian Contract Act	Chapter V
Sections 64 and 65, Indian Contract Act	Restitution outside Chapter V
Section 140, Indian Contract Act	Subrogation of a surety who pays
Section 144, Code of Civil Procedure, 1908	Restitution on reversal of a decree
Section 33, Specific Relief Act, 1963	Statutory restitution where incompetence is pleaded