Paper on Doctrine of Quantum Meruit in the light of case laws.
Doctrine
of Quantum Meruit:
The phrase quantum meruit literally means “as
much as is earned” or “as much is merited”. or “in proportion to the work
done.” A right to sue upon quantum meruit
usually arises where after part performance of the contract by one party, there
is a breach of contract, or the contract is discovered void or becomes void.
This remedy may be availed of either without claiming damages (i.e., claiming reasonable compensation
only for the work done) or in addition to claiming damages for breach (i.e., claiming reasonable compensation
for part performance and damages for the remaining unperformed part)[1].
Definition
A
person can, under certain circumstances, claim payment for work done or goods
supplied without any contract and in cases where the original contract has
terminated by breach of contract by one party or has become void for some
reason. This is known as the Doctrine of Quantum
Meruit[2].
A quantum meruit is an obligation or debt
imposed by operation of law which arises in the defendant having taken the
benefit of the work done, goods supplied or service rendered[3].
Nature of Quantum Meruit:
The
nature of this remedy was explained by the Supreme Court in Puran Lal v. State of U.P. A.I.R. 1971 S.C. 712 at 715-16 as under:
In
order to avail of the remedy under quantum meruit, the original contract must
have been discharged by the defendant in such a way as to entitle the plaintiff
to regard himself as discharged from any further performance and he must have
elected to do so. The remedy it may be noticed is, however, not available to
the party who breaks the contract even though he may have partially performed
part of his obligation. This remedy by way of quantum meruit is restitutory,
that is, it is a recompense for the value of the work done by the plaintiff in
order to restore him to the position which he would have been in if the
contract had never been entered into. In this regard, it is different to a
claim for damages which is a compensatory remedy aimed at placing the injured
party, as near as may be, in the position which he would have been in, had the
other party performed the contract[4].
Rules
The
rules regarding the Doctrine of Quantum
Meruit are stated below:
1.
Where there is a breach of contract, the injured party is entitled to claim
reasonable compensation for what he was done under the contract[5].
Examples:
Where
a party has in the performance of his contract done some work or rendered some
service and the further performance has been made useless by the other party,
he may recover reasonable compensation for the work or service. Planche v. Colburn (1831) 5 C&P 58: 172 ER 876 is an authority for this principle.
The plaintiff was the author of several dramatic
entertainments. He was engaged by the defendants, who were the publishers of a
work called “The Juvenile Library” to write for that work an article to
illustrate the history of armour and costumes from the earliest times, for
which he was to be paid 100 guineas. The plaintiff made various drawings and
prepared a considerable portion of manuscript when the defendants discontinued
the Juvenile Library. The plaintiff claimed a sum of 50 guineas for the part
which he had prepared, and the trouble he had taken in the business. He was
held entitled to it[6].
2.
When a contract is discovered to be unenforceable for some technical reason, any
person who had done something under the contract, is entitled to reasonable
compensation. The case is proved for by Section 65 of the Contract Act, 1872[7].
Example:
A
similar recovery is allowed where a person has rendered services under a
supposed contract which turns out to be a nullity. Craven-Ellis
v Canons Ltd (1936) 2 KB 403 (CA)
is an authority for this. The case runs as follows:
The plaintiff was
appointed managing director of a company. The appointment was made by the other
directors who were disqualified by reason of having not taken their
qualification shares. The plaintiff also did not take his qualification shares.
But he continued to act as managing director and sued the company for his agreed
remuneration or for a reasonable remuneration on the basis of quantum meruit.
The
Court of Appeal rejected the claim for the agreed remuneration, the contract of
appointment being void, but allowed him to recover on the basis of quantum meruit. GREER LJ emphasised that a claim of this kind
does not depend upon implied contract arising by virtue of the services having been accepted or upon inference of
law, but upon a rule of law.
“The obligation to pay reasonable
remuneration for the work done when there is no binding contract between the
parties is imposed by a rule of law, and not by an inference of fact arising
from the acceptance of services or goods. It is one of the cases which are
referred to in books on contract as obligations arising quasi
ex contractu of which a
well-known instance is a claim based on money which had been received.” {Craven-Ellis v Canons Ltd (1936) 2 KB 403 (CA)}[8]
3.
In certain cases the law presumes an implied agreement to pay for services
rendered, for example, when work is done or goods are supplied by a person
without any intention to do so gratuitously and the benefit of the same enjoyed
by the other party. This case is provided for by Section 70 of the Contract Act, 1872.
Example:
A,
a trader leaves certain goods with B by mistake, not intending to do so
gratuitously. B uses the goods. He (B) must pay for them.
4.
Where a contract is not divisible into parts and a lump sum of money is
promised to be paid for the entire work, part
performance does not entitle a party to claim payment quantum meruit.
Example:
A
sailor was appointed on a ship for a voyage from Jamaica to Liverpool on a lump
sum payment of 30 guineas. He died when only two-thirds of the voyage was
completed. Held, his legal representatives could not recover anything. Curter v. Powell.101
E.R. 573
5. Nothing can be recovered for quantum meruit when there is no evidence
of an excess or implied promise to pay for work already done.
6. ***In general circumstances, a person guilty of breach of
contract cannot claim payment on quantum
meruit.[9]
***But, a party who is guilty of breach of contract may also sue on
a quantum meruit provided both the
following conditions are fulfilled:
(a)
the contract must be divisible, and
(b)
the other party must have enjoyed the benefit of the part which has been
performed, although he had an option of declining it.
For example:
(a)
Where a common carrier fails to take a complete consignment to the agreed
destination, he may recover pro-rata
freight. (He will, of course, be liable for breach of the contract.)[10]
Other cases relating to Doctrine of “Quantum Meruit”
Similarly, where a
printer, having printed most of the work, refused to complete it because the
dedication was libellous, he was held entitled to recover on quantum meruit. {Reference: Clay v Yates, (1856) 1 H&N 73: 156 ER 1123.}
Though
the remedy is independent of contract, but the contract, if any, shall not be
wholly irrelevant. Thus where a ship was delivered for repairs and the
contractor used more expensive material than that authorised by the contract,
he could not recover under the contract because he had not carried it out
precisely, nor under quasi-contract,
because the shipowner had no chance to reject the expensive material. He could
not have rejected the ship after it was already repaired and the mere taking of
his own property was not the same thing as an acquiescence in or acceptance of
the work done. {Forman & Co Ltd v Liddesdale,
1900 AC 190 (PC)}
Where adequate
relief is available under the contract itself, the court may not provide any
relief under quasi-contract.
In the course of the performance of a
contract to construct a power dam, the owner was in several important respects
in breach of the contract. The breach was so fundamental as to justify
termination of the contract. However, the contractor continued to work and
completed the project. He claimed compensation for the owner’s breach on quantum meruit basis.
It was held that the contractor, having
continued to work the contract in the face of the owner’s breach, was entitled
to recover under the contract. Since the contractor had completed the contract,
and had adequate remedy under the contract, there was no need for law to
fashion a restitutionary remedy. Nor would it be right for the contractor to obtain
a possibly higher rate of compensation than that under the contract. {Morrison Knudsen & Co v B.C. Hydro and
Power Authority, (1978) 85 DLR (3rd) 186 (Br Col CA).}[11]
(N.B. Here, DLR means
Dominion Law Reports)
In De
Bernardy v. Harding, (1873) 3 Ex. 822 the
defendant, who was to erect and let seats to view the funeral of the Duke of
Wellington, appointed the plaintiff as his agent to advertise and sell tickets
for the seats. The plaintiff was to be paid a commission on the tickets sold by
him. The plaintiff incurred some expense in advertising for the tickets but
before any tickets were actually sold by him, authority to sell tickets was
wrongfully revoked by the defendant. It was held that the plaintiff was
entitled to recover the expenses already incurred by him, an action for quantum meruit.
The
remedy by way of quantum meruit is not a contractual remedy although in some
cases the remedy is available on the breach of contract by a party to it. The
real nature of the remedy is quasi-contractual.
The remedy has, therefore, been held to be available when the work has been
done by plaintiff under a void agreement.[12]
Limitations:
According
to the decision of the courts of England, in the lowing cases, the doctrine of quantum meruit is not applied:
1) Where
the amount of money for the whole act is certain, but the unperformed act cannot
be separated from the whole act, that is to say, where unperformed act is
considered to be important part, then this principle will not be applied.
2) Where
no proof of expressed or implied promise is found for act performed earlier.
3) According
to this doctrine if the claimant of value or remuneration is himself liable for
breach of contract.[13]
Prepared by-
Nazmul Hasan,
Senior Judicial Magistrate at Bangladesh
Judicial Service, 11th BJS.
Author's academia ID link:https://independent.academia.edu/NazmulHasan222
Author's blogger ID link:https://judicialmagistratenazmulhasan.blogspot.com/
[1] MERCANTILE LAW by
M C Kuchhal, 7th Revised Edition, VIKAS PUBLISHING HOUSE PVT LTD, Page No. 164.
[2] COMMERCIAL LAW
Including COMPANY LAW AND INDUSTRIAL LAW Business Law (Business Regulatory
Framework) By Arun Kumar Sen and Jitendra Kumar Mitra, The World Press Private
Limited, Kolkata; Twenty-Fifth Edition: 2008, Reprint 2012; Page No.141.
[3] AVTAR SINGH’S LAW
OF CONTRACT ACT (A Study of the Contract Act,1872) and SPECIFIC RELIEF by
RAJESH KAPOOR, Thirteenth Edition, 2022, Reprinted, 2023 Page No.586.
[4] The Indian
Contract Act by Dr. R.K. Bangia (Revised by S.K. Raghuvanshi) 16th Edition,
Allahabad Law Agency: Law Publishers, Faridabad (Haryana), Page No.337.
[5] COMMERCIAL LAW
Including COMPANY LAW AND INDUSTRIAL LAW Business Law (Business Regulatory Framework)
By Arun Kumar Sen and Jitendra Kumar Mitra, The World Press Private Limited,
Kolkata; Twenty-Fifth Edition: 2008, Reprint 2012; Page No.141.
[6] AVTAR SINGH’S LAW
OF CONTRACT ACT (A Study of the Contract Act,1872) and SPECIFIC RELIEF by
RAJESH KAPOOR, Thirteenth Edition, 2022, Reprinted, 2023 Page No.586.
[7] COMMERCIAL LAW Including COMPANY LAW AND
INDUSTRIAL LAW Business Law (Business Regulatory Framework) By Arun Kumar Sen
and Jitendra Kumar Mitra, The World Press Private Limited, Kolkata; Twenty-Fifth
Edition: 2008, Reprint 2012; Page No.141.
[8]
AVTAR SINGH’S
LAW OF CONTRACT ACT (A Study of the Contract Act,1872) and SPECIFIC RELIEF by
RAJESH KAPOOR, Thirteenth Edition, 2022, Reprinted, 2023 Page No.586.
[9]
COMMERCIAL
LAW Including COMPANY LAW AND INDUSTRIAL LAW Business Law (Business Regulatory
Framework) By Arun Kumar Sen and Jitendra Kumar Mitra, The World Press Private
Limited, Kolkata; Twenty-Fifth Edition: 2008, Reprint 2012; Page No.141.
[10] (MERCANTILE LAW by
M C Kuchhal, 7th Revised Edition, VIKAS PUBLISHING HOUSE PVT LTD, Page No. 166)
[11] AVTAR SINGH’S LAW
OF CONTRACT ACT (A Study of the Contract Act,1872) and SPECIFIC RELIEF by
RAJESH KAPOOR, Thirteenth Edition, 2022, Reprinted, 2023 Page No.(586-587)
[12] The Indian
Contract Act by Dr. R.K. Bangia (Revised by S.K. Raghuvanshi) 16th Edition,
Allahabad Law Agency: Law Publishers, Faridabad (Haryana), Page No. (337-338).
[13] Law of Contract
(Including Partnership & Sale of Goods) by Dr. A B Siddique, Kamrul Book
House, Dhaka-Chittagong, September, 2012, Page No.145.
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