Quantum Meruit

QUANTUM MERUIT

Quantum Meruit is a legal action taken to recover damages for work done in situations where “no price has been agreed upon”. Quantum Meruit literally translates to “as much as is deserved.” It is seen as synonymous to equitable compensation. It can also be viewed as a certain remedy to a particular breach of contract.

In such cases, the plaintiff does not seek a definite amount of compensation but rather he seeks the value of the service or goods that the plaintiff has provided the defendant and this price is estimated as per the market price.

In order for Quantum Meruit to be applicable, the plaintiff must prove beyond any reasonable doubt that the defendant had freely accepted the goods or services of his own volition. The suit of Quantum Meruit arises when a part of a contract is performed by one party and then the other party is found to be unjustly benefitted. The biggest obstacle in applying the said rule is the estimation of the amount that is to be compensated.

It is also vital to note that Quantum Meruit cannot be applied if the parties had reached an agreement wherein, they had agreed to pay a certain sum to the other party.

The key scenarios in which Quantum Meruit may be applicable are as follows:

1. In cases where there exists no contract or there is a certain ‘quasi-contract’ – If the parties had agreed upon what services or duties should have been fulfilled but had not agreed on a fixed compensation or price for the same. This has been highlighted under Section 70 of the Indian Contract Act, 1872.
2. In cases where the parties had agreed upon a particular scope of work under the original contract but the work that was carried out falls outside that scope.
3. In cases where one party fulfils his/her contractual duties completely but the other party refuses to do his part.
4. Section 65 of the Indian Contract Act speaks of the circumstance wherein while executing a contract, work has been done however, it is later discovered that the contract was indeed void.
5. When a person benefits off of a non-gratuitous act (an act which is done in expectation of payment and not out of generosity) and the person who has availed this benefit must compensate the party that delivered it.

Quantum Meruit is often confused with the term Unjust Enrichment since both concepts delve into preventing one party from unjustly benefitting off of the work done by the other.

However, it is to be noted that the difference between the concepts is that unjust enrichment deals directly with issues which include a failure to pay for the services whereas Quantum Meruit handles issues where the amount paid must be fair or reasonable.

It is vital to prove that the defendant had agreed to accepting the services that were provided by the plaintiff in cases of Quantum Meruit but in cases of Unjust Enrichment, the acceptance of the other party is not required. The plaintiff must also prove that the defendant was aware that he/she had to pay for the services they had agreed to receive. Hence, for Quantum Meruit to be applied, the plaintiff must prove that the defendant was unjustly enriched. Therefore, Quantum Meruit includes Unjust Enrichment under its wide ambit.

In the case of Planche vs Colburn [1831] EWHC KB J56, the plaintiff entered into an agreement to write a book for the defendant.

On completion of the work, 100 pounds was agreed to be paid. The plaintiff started writing the book and completed a large portion of it. Afterwards, the defendant decided not to proceed with the work and refused to pay money to the plaintiff, even though the plaintiff was ready and willing to perform the work.

It was held that the plaintiff is entitled to claim the money as the defendant has refused to perform his part of the contract.

Further in the case of Craven-Ellis v. Cannons Ltd [1936] 3 All ER 1066 Craven Ellis was appointed as the managing director of a company under an agreement in which his remuneration was fixed. But it was found that the contract is void because neither Crave Ellis nor the directors seem to execute the contract as they did not obtain the qualification shares (a share of common stock that a candidate for a company’s Board of Directions (BOD) is required to own) within two months after the appointment which was required as per the Articles of Association.

The plaintiff continued to render the services even though the contract was void. His suit upon quantum meruit is a valid one as the contract being void does not disentitle him to claim for his services rendered. Since the company had accepted the benefits of services rendered by Craven Ellis knowing that the services were not intended to be gratuitous, it was held that Craven Ellis, for his services rendered, is entitled to receive reasonable remuneration.

Next it is seen in the case of Hoenig v. Isaacs [1952] 2 All ER 176 where the plaintiff is an interior decorator who entered into a contract with the defendant to perform the decorative and furnishing work. A lump sum of £750 was to be paid for the work.

On completion of the work, the outstanding balance was £350 for the contractor’s work and labour. The defendant refused to pay the balance amount on the grounds that there were certain defects regarding the wardrobe and bookshelf and the cost for the defects was £56. The plaintiff brought a suit for the refusal. The Court held that the plaintiff has completed most of the work which was agreed between the two and was therefore entitled to the remuneration which was agreed in between them by reducing the price of the defects.

Therefore, it can be said that Quantum Meruit is a legal remedy for any breach of contract and it must be viewed as a useful fallback or backup plan in case compensation has not been agreed upon or if there is a breach of contractual duties.

Author: Keerthana R,
Christ University 2nd Year, Law Student