Don’t have a contract? You could still be entitled to claim under Quantum Meruit…
You may be entitled to make a claim for services even if there is no contract. When a service is not performed you have two options to rectify the situation – you can either make a claim for contractual damage or through Quantum Meruit. In cases where a party has performed work for another party and there is no contract on foot, the party providing the services may still be entitled to make a claim for the work they have performed.
This type of claim is known as a Quantum Meruit claim and means "the amount he deserves" or "what the job is worth". A successful Quantum Meruit claim entitles the claiming party to the reasonable value of services performed. As can be guessed a lot of the case law surrounding Quantum Meruit claims turn on the question of what is “reasonable”.
Quantum Meruit comes from the law of unjust enrichment which is established by the following:
- The receiving party must have been enriched by receiving a "benefit";
- The "benefit" must have been gained at the expense of the party performing the work;
- It would be unjust, in the circumstances, to allow the receiving party to retain the benefit.
The absence of a contract is not the only situation which may give rise to a possible Quantum Meruit claim. Other situations include:
- A contract exists but the contract does not provide for a fixed price;
- Work commences before negotiations for a contract have been settled and the negotiations subsequently fail;
- Work done outside of the scope of works provided for in the contract;
- Work done under a void, unenforceable or terminated contract
For example Party A contracts Party B to do certain work under a contract for a fixed price. The contract states that work done outside the scope of the contract must be paid.
Party B provides Party A with services which are outside the scope of works as provided for in the contract and then invoices for that work.
If Party A disputes that they should pay the invoice then Party B then has a Quantum Meruit claim against Party A for the reasonable value of the services provided outside the scope of works as:
- Party A received a "benefit" from Party B in receiving the services;
- Party A received the "benefit" at the expense of Party B in performing the work;
- It would be unjust, in these circumstances, to allow Party A to retain the "benefit"
As stated above a significant number of Quantum Meruit cases deal with the definition of “reasonable” in the context of services provided. Unfortunately the Courts have not provided a clear guideline in this regard.
It is difficult to definitively say what components should be included in a Quantum Meruit claim as each case will be decided on its own facts and merits. Regardless, Contractors and Principals should be mindful of the fact that what is written and signed does not always dictate the relationship between relevant parties.
If you need advice on making a claim under Quantum Meruit or have concerns about a breach in contract please contact:
Hadi Boustani, Associate
Phone: +61 2 9895 9202