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Construction & Engineering

Cutting through the legalese: “Quantum Meruit”

Quantum meruit is a Latin phrase meaning “as much as deserved”.  In plain English that means “a reasonable sum of money to be paid for services rendered or work done when the amount due is not stipulated in a legally enforceable contract.”

A party who performs a service for another party usually enters into a written contract or agreement before performing the service. For instance, a contractor will insist on having a formal agreement with the employer before undertaking the works. In an ideal world, parties will always have a signed written agreement before commencing work.  In that ideal world, that signed contract will cover all of the work done (not just the work envisaged at the start).  However, we do not live in an ideal world.  Sometimes work is done where the price for that work has not been agreed in advance.  In the absence of an agreement or formal contract, the contractor may be unable to recover losses in court if problems occur. Quantum meruit is a judicial doctrine that allows a party to recover losses in the absence of an agreement or binding contract.

A quantum meruit claim arises if there is no specified sum to be paid under an agreement between the parties. However, it can also arise even where there is a contract if:

  • there is an express agreement to pay a reasonable sum;
  • the parties have not agreed all the terms of the contract including the price for the works;
  • a scope has been agreed under the original contract and the work falls outside that scope (where parties did not have a variation procedure in the contract); or
  • the contract is later found to the void or unenforceable.

What is a reasonable enforceable sum? The courts usually value a quantum meruit claim at a fair commercial rate. The courts will also take the following points into consideration:

  • site conditions;
  • the conduct of the parties;
  • quality of the works; and
  • whether the contract (if any) refers to certain prices

The actual numbers would usually be determined in court with the assistance of expert witnesses.  Ideally, parties would negotiate a settlement before court, but they may need expert reports to help them predict what the court would deem to be “reasonable” in order to guide negotiations. 

The main intention of quantum meruit is to deliver justice to an aggrieved party in a just and reasonable way depending on the circumstances. Accordingly it is not uncommon in legal proceedings for quantum meruit to be requested alongside/as an alternative to normal damages for a breach of contract.

The case William Lacey (Hounslow) LTD v Davis [1957] (unreported) illustrates how quantum meruit claims work. The contractor submitted a tender for the rebuilding of a war-damaged premises. In the belief that a contract would be entered into, the contractor prepared various estimates, schedules and the like which the employer used in negotiation with the War Damage Commission. Subsequently, the employer sold the property and so the tender was not accepted and a contract was never entered into.  The contractor wanted to be paid for his time and effort. 

The contractor issued a claim and it was held that the contractor was entitled to a reasonable sum for the work carried out subsequent to the tender submission, even though there was not a contract in place between the parties.  The key point here was that the “quantum meruit” claim was allowed because the court found it was reasonable for the contractor to believe that a binding contract would be entered into. 

These notes have been prepared for the purpose of an article only. They should not be regarded as a substitute for taking legal advice.

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