Section 70 of Indian Contract Act

The Indian Contract Act, 1872 is a foundational law that governs contracts and agreements in India. Among its important provisions, Section 70 stands out as a special rule. It deals with situations where one person benefits from another’s lawful act or delivery, even when there is no formal contract between them. 

This provision plays a vital role in ensuring justice and fairness in everyday transactions and business dealings. Let us understand Section 70, its scope, practical examples, judicial interpretations, and its relevance in today’s world.

What is Section 70 of the Indian Contract Act?

Section 70 is a part of the “quasi-contracts” chapter in the Act. Quasi-contracts are not real contracts formed by offer and acceptance. Instead, they are obligations created by law to avoid unjust enrichment of one party at the expense of another. Section 70 specifically states:

“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 respect of, or to restore, the thing so done or delivered.”

In simple terms, if someone lawfully provides goods or services to another person (without intending to do it for free) and the other person actually enjoys or uses that benefit, then the latter must pay for it or return the goods.

The Principle of Unjust Enrichment

The main idea behind Section 70 is to prevent “unjust enrichment”. In other words, the law does not allow a person to get a benefit at someone else’s expense without giving fair compensation. If A does something for B with the expectation of payment, and B enjoys the benefit, then B cannot simply walk away without paying A. Even if there is no written contract, the law steps in to ensure justice.

Essential Elements of Section 70

For Section 70 to apply, three conditions must be satisfied:

Lawful Act or Delivery

The act done or the goods delivered must be lawful. This means that the act should not be illegal or against public policy. For example, if someone delivers illegal goods, Section 70 cannot be invoked.

No Gratuitous Intention

The person who does the act or delivers the goods should not intend to do it gratuitously (i.e., as a free service or gift). There should be an expectation of payment or reward.

Enjoyment of Benefit

The other person (recipient) must have actually used or enjoyed the benefit. If the recipient refuses the goods or services, there is no liability.

Detailed Examples and Application

Let’s look at more detailed illustrations to see how Section 70 works in practice:

Example 1: Mistaken Delivery

A, a tradesman, leaves a parcel of goods at B’s house by mistake. B uses the goods. Here, B is bound to pay A for the value of the goods, because:

• The delivery was lawful,
• A did not intend to give the goods for free,
• B used and enjoyed the goods.

Example 2: Services Rendered Without Formal Contract

Suppose A repairs B’s leaking roof during the monsoon, expecting to be paid, and B accepts and enjoys the benefit. Even if there was no formal contract, B must pay A a reasonable amount for the repair.

Example 3: Professional Services

A web developer, without a formal agreement, quickly fixes an urgent issue on B’s business website during a crisis. B profits from the repair. Since the service was not intended to be free and B benefited, B must pay for the service.

Example 4: Emergency Situations

During a flood, a neighbour spends money to protect your house from water damage, expecting reimbursement. If you accept the benefit, you are required to compensate your neighbour.

Purpose and Policy Behind Section 70

The key purpose of Section 70 is to ensure fairness in situations where:

• There is no explicit contract,
• One party acts for the benefit of another with the expectation of payment,
• The other party accepts and enjoys the benefit.

Without such a rule, many would be discouraged from acting in good faith to help others or provide services without an immediate agreement. The law thus bridges the gap and ensures that one person is not unfairly enriched at the expense of another.

Landmark Cases Related to Section 70 of Indian Contract Act

Indian courts have interpreted Section 70 on several occasions, clarifying its scope and limits.

Kanhaya Lal v. National Bank of India (1913)

Facts: The plaintiff mistakenly delivered goods to the defendant bank, which used them for its own purpose.

Decision: The court held that the bank was liable to compensate the plaintiff. There was no gratuitous intention, and the bank enjoyed the benefit of the goods.

State of West Bengal v. B.K. Mondal & Sons (1962)

Facts: The plaintiff constructed structures for the State government without a formal contract, but the government used them.

Decision: The Supreme Court held that even in the absence of a formal contract, the government must pay for the benefit it received. The judgment established that Section 70 applies even if the government has not followed constitutional contracting procedures, as long as the act was lawful, not gratuitous, and the benefit was enjoyed.

Limitations of Section 70

Despite its wide scope, Section 70 does have certain limits:

• No Compensation for Illegal Acts: If the act or delivery is illegal, no compensation can be claimed under Section 70.
• No Gratuitous Acts: If the provider clearly intended the act or delivery as a gift, Section 70 does not apply.
• No Benefit, No Payment: If the recipient does not use or enjoy the benefit, there is no liability.
• Not Applicable Where Formal Contract Exists: Section 70 only applies where there is no formal contract. If a contract exists, its terms prevail.

Section 70 and Quasi-Contracts

Section 70 is part of a broader set of quasi-contractual rules (Sections 68–72) that cover situations where law imposes an obligation as if there was a contract, even though no real contract exists. These sections help fill gaps in the law and ensure justice and fairness in unique circumstances.

Conclusion

Section 70 of the Indian Contract Act, 1872 is a practical and fair provision that helps prevent unjust enrichment in Indian law. It ensures that if you benefit from another person’s lawful and non-gratuitous act or goods, you must compensate them—even in the absence of a formal contract.