INTRODUCTION
Quantum
meruit is a Latin phrase meaning "what one has earned" . In the
context of contract law , it means something along the " reasonable bars
of service ".
The Black Law Dictionary states
:-" quantum meruit means "as much as he deserved". It is an
expression that describes the extent of liability on a contract implied by law.
It is an equitable doctrine, based on the concept that no one who benefits by
the labour and material of another should be unjustly enriched thereby. The law
implies a promise to pay a reasonable amount for the labour and material
furnished , even absent a specific contract."
Quantum meruit means payment
in proportion to amount of work done. Generally, one cannot claim performance
from another unless one has performed his obligation in full . But in certain
cases, a person who performed some work under a contract can claim remuneration
for the work which he has already done. The right to claim on 'quantum meruit'
does not arise out of contract as right to damage does. It is a claim on quasi
contractual obligation which is implied by circumstances. The claim for quantum
meruit arise only when the actual contract is discharged.
when a party has in
performance of his contract done some work or rendered some service and the
further performance has been made useless by the other party, he may recover
reasonable compensation for the work or service. Cases of quantum meruit arises
when there is no verbal or written contract but it is understood that one
should get what he deserves. For example if a poor servant works for a couple,
the couple is bound to pay a reasonable amount to their servant which he deserves
. But in case if the couple fails to pay then arises the claim for quantum
meruit.
QUANTUM MERUIT AND UNJUST
ENRICHMENT
Unjust enrichment is better known
to construction industry by the term "quantum meruit" but the terms
are not synonymous :
Quantum meruit is the award made on
a claim based on unjust enrichment. Quantum meruit is to unjust enrichment what
damages are to breach of contract or tort. Unjust enrichment is compensated by
an award of quantum meruit ,while breach of contract and tort are compensated
by an award of damages. Damages and quantum meruit are sometime equal in amount
but, since they are calculate differently , this is coincidence.
There are two distinct ways in
which the term "quantum meruit" can be used :
·
contractual quantum
meruit where there is a genuine contract for remuneration but the contract fails to
prescribe a price restitutionary quantum
meruit where there is no genuine contract i.e. the work performed is not
subject to a contract or the contract has ceased to exist.
The measure of
quantum meruit is not necessarily the same in both situations: whereas with
contractual quantum meruit the court award the contractor a reasonable price
for doing the work, with restitutionary quantum meruit the court award an
amount equal to the value of the benefit received . Deane J in Pavey and
Matthews Pty Ltd v. Paul described
restitutionary quantum meruit as being "an amount which constitutes , in
all relevant circumstances, fair and just compensation for the benefit or
'enrichment' actually or constructively accepted"
CASES IN WHICH QUANTUM MERUIT CLAIM ARISE
Quantum meruit is a claim
under quasi contract. The claim of quantum meruit arise only when the original
contract is discharged. The various cases in which quantum meruit arise are :-
1.In case of void agreement or contracts that become void [ section 65]
2.In case of gratuitous act [section 70]
3.In case of act preventing the completion of contract
4.In case of divisible contract
5.In case of indivisible contract
performed completely but badly
now,
let us discuss them one by one
(a) In Case of Void Agreement or Contract that
become Void [section 60]
when an agreement is
discovered to be void, or a contract become void ,any person who received an advantage
over the agreement or contract is bound to restore it or make some
compensation to the person or party from whom it is received.
illustration{1}
if A contracts with B to
deliver 300 laptops before 13th of august , 2012. A delivers them only 300
laptops before that day and none after,
B retains those 300 laptops after 13th of august .He is bound to pay A for them.
illustration {2}
If A contracts with B to play
violin for him in his theater for 10 days. A performs in B's theater for 6 days
but fails to perform from the seventh day to tenth day due to illness. B is
bond to pay A for those 6 days she performed.
(b) In Case of Non-gratuitous Act [ section
70]
The obligation to pay arise if
the following three conditions are satisfied :
- the person who had done or delivered the thing must not have intended to so gratuitously and
- the person for whom the act is done must have enjoyed the benefit of the act
illustration {3}
A a tradesman leaves his goods at
B's shop by mistake. B treats them as his own goods . He is bound to pay A for
them.
(c) In Case of Act Preventing the Completion of Contract
If a party does not complete the
contract or the prevent the other party from performing the contract, the aggrieved party can sue the other party on
quantum meruit .
illustration{4}
S a owner of music publishing house
engaged Q a music director to compose a
music series which will be published by his music publishing house. The first
part of the music album was released but before publication the second part the
music publication house closed. Here ,Q can claim quantum meruit for the part
already released.
(d) In Case of Divisible Contract
The party at default can sue on a quantum meruit if the
following conditions are satisfied :
·
If the contract is
divisible ; and
·
If the party not at default
has enjoyment benefits of the part performance.
illustration{5}
C agreed to construct
to a house for D for Rs.1,500 but he
abandoned the contract in the mid way after having done the work worth Rs. 478.
Afterwards , D got the work complete. Here, C could not recover anything for the work done as he
was entitled to the payment only on completion of the work.
(e) In Case of Indivisible Contract performed Completely but Badly
The party at
default may claim the lump sum less deduction for bad work if the following
conditions are satisfied :
- · If the contract is indivisible
- · If the contract is for lump sum
- · If the contract is completely performed and
- · If the contract is performed badly.
P agreed to construct a house for Q for a lump sum of Rs.1,00,000.
P did complete work but Q complained of faulty workmanship. It cost Q another
50,000 to remedy the defect. In this case P could only recover only 50,000 from
Q.
case
In Hoenig v. Issacs ,
Hoenig the plaintiff interior decorator, contracted to perform decorative and
furnishing work for the defendant ,Isaacas. the contract sum of £ 750 was to be
paid "net cash , as the work proceeds, and balance on completion".
The defendant refused to pay the balance on the ground that certain work done
and article of furniture supplied were defective . The plaintiff began an
action for the outstanding amount.
Held :- In a lump sum contract for work in the sum is payable
on completion, the defendant cannot refuse to pay because, even though the work
is substantially complete, there are small items which are not in compliance
with the exact specification of the contract . The defendant is obligated to
make prompt payment of the contract sum less an allowance based on the cost of
completing the work or correcting the defects. Even if the complete performance
of the work in accordance with the specification was a condition precedent to
payment, the defendant waives the right to enforce such condition when he takes
benefit of the work by using the apartment and defective furniture. At such
time the defendant is obliged to pay the contract price after making the above described
deductions.
QUANTUM MERUIT: THE GLOBAL OVERVIEW
1.
TEXAS : In Heldenfels Brothers v. City of Corpus Christi,
it was held that recovery
under the equitable doctrine of quantum meruit requires proof of four elements
or essential facts:
(1) The claimant
furnished either valuable services or materials or both;
(2) The services and/or materials were furnished to the party sought to be charged;
(3) The services and/or materials were accepted by the party sought to be charged,
(4) The services and/or materials were furnished and accepted under such circumstances that the party accepting the services and/or materials was reasonably notified that the plaintiff, in performing, expected to be paid by the party who accepted the services and/or materials.
(2) The services and/or materials were furnished to the party sought to be charged;
(3) The services and/or materials were accepted by the party sought to be charged,
(4) The services and/or materials were furnished and accepted under such circumstances that the party accepting the services and/or materials was reasonably notified that the plaintiff, in performing, expected to be paid by the party who accepted the services and/or materials.
The
proper measure of damages for a claim in quantum meruit is the reasonable value
of work performed and the materials furnished.
2. LOUISIANA: the well-known
remedy, quantum meruit, From a casual invocation in a few early
Louisiana cases, this
phrase, meaning "as much as he deserved," has proliferated to the point of
being one of the most frequently sought forms of relief. Although quantum meruit may be a handy label to utilize in any
number of circumstances, its career in Louisiana has been marked by confusion
and inconsistency, both as to the proper instances for its application and as
to the correct measure of recovery. This
is attributable in large measure to the fact that having once borrowed quantum meruit from the common law, our courts have
modified its theoretical and practical application in an attempt to render the
remedy consonant with the Civil Code. A
reexamination of this ill-advised import is long overdue
3. MALAYSIAN : Act 36 -Contract Act 1950(Malaysia) claims under circumstances explained above are further supported by the content of Malaysian contract act 1950 and specifically the content of section 71 which 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 benefit thereof, the latter is bound to make compensation
to the former in respect of, or to restore, the thing so done or delivered'
definition of Quantum meruit in Malaysian context is the
determination of value of service extended based on the amount of the work and
the rate of work existing there for similar work, when an agreement or contract
is not existing between the parties. This Latin word ' kwahn-tuhm mare-ooh-it'
means "as much as deserved.
An entitlement for payment under
quantum meruit usually arises in one of the two circumstances, either when a
contract is silent on how work done is
remunerated or paid or where the contract contains an express agreement to pay
a fair and reasonable sum or on similar
term.
A claim for payment under the
doctrine of quantum meruit is restitution is usually presented as a claim in
the alternative. It is said to be quasi-contractual claim under where the
claimant seeks to be compensated for
an amount representing the reasonable sum for works he had already completed
.for example
(a) Where the contract has been
held to be discharged by frustration
(b) An Employer requested for work from
the contractor which are not governed by
any contract
(c)Where
the parties proceed on the mistaken understanding there is an enforceable
contract, but this found not to be the case .
4. CANNADA : In this country , quantum meruit is not based on
contract law but rather depends on equitable principle of unjust enrichment.
Estoppel allows an implied promise would not create a cause of action . Instead
'quantum meruit' is based on the need to prevent the neighbor from unjustly
enriching himself by allowing the fence builder to proceed with the work based
on an assumption that he would be compensated.
5. CALIFORNIA : In California, the requisite elements of quantum meruit are the plaintiff acted pursuant to an express or implied request for service by the defendant, and the service rendered benefited the defendant.
A common count
which is based on exactly the same facts as an express cont for breach of
contract normally also fails to state a cause of action. like in the case of
Lambert v. southern counties Gas Co.
6.
UNITED STATES: In the
United States, the elements of quantum meruit are determined by state common law. For example, to state a claim
for unjust
enrichment in New York, a plaintiff must allege that
defendant was enriched; the enrichment was at plaintiff's expense; and
the circumstances were such that equity and good conscience require defendants
to make restitution.
conclusion
The
Latin expression 'quantum meruit " is one of the most popular expression
used in law today. Unfortunately the meaning is not clear . The definition
varies slightly from one legal jurist to other. This is largely based on
different legal decision that have interpreted the term.
So,
what does it mean ?
Translated,
it actually means "as much as deserves" . Traditionally, courts
assessed a quantum of damage , where work was performed pursuant to a contract
but no agreement was reached on the amount, the court would just determine what
was fair . In some jurisdictions , "quantum meruit" is the court's
method of calculating damage arising from a contract, when a contract is
unclear.
Suit
upon quantum meruit is basically a claim
against the value of the material supplied or used under a contract, which
becomes void on account of breach of contract. In Indian Contract Act , 1872,
The claim of quantum meruit arise under section 65 in case of void agreement or
contract which becomes void and under
section 70 in case of gratuitous act. the claim for quantum meruit may also
arise if the contract is incomplete or if so it is complete but performed badly.
However in whole it means one should get what he deserves to get on the basis
of task performed.