QUANTUM MERUIT

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 :

1.  things must have been done or delivered lawfully
2. the person who had done or delivered the thing must not have intended to so gratuitously and
3. 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 :

1. ·         If the contract is indivisible
2. ·         If the contract is for lump sum
3. ·         If the contract is completely performed and
4. ·         If the contract is performed badly.

illustration{6}

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.

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.