Quantum meruit

Quantum meruit is a legal concept meaning “what the job is worth” or “the amount he deserves”. The Latin translation is “as much as is deserved”, and the concept is closely related to unjust enrichment. The purpose of the concept is to make sure that neither party get an unjust enrichment at the expense of the other party.

Action of quantum meruit

An action of quantum meruit might be brought when a service has been performed and the payment for that service should be of a reasonable amount, and the court then may decide the level of the reasonable amount depending on the work performed. Thus, a claim for quantum meruit cannot be made when there is an enforceable contract between the parties where the payment already has been regulated. However, quantum meruit can be used as a remedy in contract law in the event of a breach of a contract after one of the parties received partial or full benefit. An example when quantum meruit is often used is when lawyers have performed legal services for a client without having the client sign a retainer. When the court is asked to recognize the bill for the services, the lawyer often refer to quantum meruit.

Cases

The most fundamental case in regards to quantum meruit is the decision from the High Court in Pavey & Matthews v Paul [1987] 162 CLR 221. The case was originated by a licensed builder after he and a woman had entered into an oral contract where the builder should perform some building work for a reasonable remuneration. After the builder had completed the work and it had been accepted by the woman, she refused to pay some of the money the builder claimed for his work. Since there was no written contract between the parties, the builder could not claim the money based on the Builder Licensing Act 1971.

Therefore, the builder sued the woman and claimed the amount being due and payable according to quantum meruit. After the case had been appealed to the High Court of Australia, the majority in the High Court allowed the appeal in favour of the builder. The High Court found that an action for quantum meruit does not require the existence of a written contract. Instead, it arises as a result of the performed work accepted by the defendant. The purpose of the quantum meruit is to prevent either of the parties being unjustly enriched because of the other party’s performance.

The concept has, according to the High Court, nothing to do with enforcing a contract; rather it is derived from the work performed in accordance with an unenforceable contract that has been accepted by the defendant. Even though the existence of an oral contract might be important for the plaintiff in proving that the performance was not intended as a gift and that the defendant has not rendered the exchanged promised value, the purpose with an action in quantum meruit is not to enforce the contract. Since the plaintiff in these cases needs to prove that he or she did the work, the defendant accepted it and did not pay the agreed remuneration, the obligation the court is enforcing on the defendant differs from a contractual obligation if the contract had been enforceable, according to the High Court.

The High Court added that this concept is not applicable in cases were a party refuses to pay because the contract does not fulfil the statutory requirements.

Criteria

Since the Pavey & Matthews v Paul case, other decisions have specified the criteria for when and under which circumstances the concept might be applicable.

  • First, the defendant must have been enriched.
  • Second, the enrichment must have been at the plaintiff’s expense
  • and last the enrichment must have been unjust.

In a decision from the High Court in 2007, Farah Constructions Pty Ltd v Say-Dee Pty Ltd [2007] HCA 22, the High Court concluded that whether an enrichment is unjust or not depends on the existence of a qualifying or vitiating factor that falls into a specific category. Examples of categories are mistake, duress or illegality. The High Court stated that the unjustness should not be determined after a subjective evaluation of unfairness or what is unconscionable. Furthermore, the High Court found that the list of which areas the concept of unjust enrichment might be applicable is specific and long-established. One of the areas where the concept might be applicable is in the area of liability for breach of a fiduciary duty.

Example of how a quantum meriut claim might be wtitten is:
“The plaintiff carried out certain work, namely… at the request of the defendant. The defendant has accepted the benefit of the work but has not paid the plaintiff for the work. The plaintiff claims the reasonable value of the services provided by the plaintiff to the respondent, namely $… and interest.”

A defence to such a claim might be that there is an existing contract and that the work was carried out under the contract and that everything has been paid according to the contract. It might therefore be an idea to make an alternative claim along these lines:
“In the alternative, the plaintiff claims that the plaintiff and the defendant entered a contract for… Pursuant to the contract, the plaintiff ordered extra work, namely… The plaintiff carried out the extra work. Under the terms of the contract the defendant was bound to pay for that extra work but the defendant has in breach of contract refused to do so. The plaintiff claims damages of $… and interest.”

 

Need Legal Advice?

For more information and legal advice, call our experienced solicitors on (02) 9233 7776 or email us.