If you have performed work without entering into a formal agreement, or the agreement you initially entered is void or terminated, you may still be entitled to payment by way of a quantum meruit claim. This article will explore the option available to you and how you should proceed.
What Does Quantum Meruit Mean?
Quantum meruit is a Latin phrase meaning “what one has earned”. It is sometimes translated to other similar phrases meaning “the amount one deserves” or “what the job is worth”. In a legal context, quantum meruit claims arise where you have completed work (whether in full or in part) without an agreement in place. Alternatively, the work may take place under an agreement that is no longer valid. In either situation, you do not receive payment for the work you have performed. In these cases, you may still be able to recover a ‘reasonable sum’ of money by making a quantum meruit claim.
When Does a Quantum Meruit Claim Arise?
A quantum meruit claim may arise in various circumstances, but these are most common when it is difficult to gauge the exact price of work undertaken. For example, contractors entering building and construction agreements.
Typical examples include where:
- the contract outlines the scope of work but does not include an exact price or mode for its calculation;
- the customer requests work to be performed outside of the negotiated contract;
- the work is completed, but the original contract no longer exists (because it is unenforceable, void or terminated);
- the contract stipulates that a lump sump is to be paid upon completion of the whole work, but only part of the work is completed; or
- the work is performed under a ‘heads of agreement’ rather than a contract.
In these situations, the Court will consider the individual facts to determine whether there is a valid case for payment.
Continue reading this article below the formWhat Does a Court Assess in a Quantum Meruit Case?
In deciding regarding a claim in quantum meruit, a Court will consider four main questions. These are:
1. Was there a benefit conferred to the defendant?
2. Was the benefit or enrichment at the plaintiff’s expense?
3. Was the enrichment unjust?
4. Does the plaintiff have a defence?
If the Court is convinced that there is a valid claim, a ‘reasonable sum’ will be calculated and paid to the defendant.
What is a Reasonable Sum, and How is it Calculated?
Quantum meruit is not a remedy for breach of contract, rather it is based on unjust enrichment. As such, the amount awarded will typically depend on what is considered to be just and fair in the circumstances.
When determining the reasonable sum, a Court will consider a range of factors, including:
- whether the contract (if such a document exists) provides any guidance or formula for calculating the cost of the work;
- the quality and the standard of the work;
- the commercial value of the work;
- evidence of the costs incurred in performing the work (such as invoices and receipts); and
- whether either party has engaged in bad faith.
In most cases, the reasonable sum will not exceed the overall contract price (if one exists), unless it is unconscionable.
Can I be Prevented from Arguing Quantum Meruit?
There are some circumstances where you will not be eligible to argue quantum meruit. These include:
- where the work has been completed before termination of the contract. In this case, the remedy is limited to a debt for the amount due under the contract or damages for a breach of contract;
- where you agree that you will do work for no payment; or
- if you act in bad faith.
Whether you’re a small business owner or the Chief Financial Officer of an ASX-listed company, one fact remains: your customers need to pay you.
This manual aims to help business owners, financial controllers and credit managers best manage and recover their debt.
Key Takeaways
If you have performed work (whether in full or in part) without an agreement in place or under an agreement that is no longer valid, you may be able to receive payment by making a quantum meruit claim. However, you must prove that you cannot claim payment despite performing the work. Furthermore, you must demonstrate that you are charging a reasonable price for your services. In these cases, you may receive a ‘reasonable sum’ for the completed work through quantum meruit.
If you need help with a quantum meruit claim, our experienced commercial lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Quantum meruit claims arise where you have completed work without an agreement or under an invalid agreement. Quantum meruit allows you to recover a ‘reasonable sum’ of money by making a claim.
A court will consider several factors, including whether a benefit was conferred to the defendant, whether they were enriched at the plaintiff’s expense, whether the enrichment was unjust, and whether the plaintiff has a defence.
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