Quantum meruit is a phrase which means ‘what one has earned’. There are often transactions where a dollar figure for payment isn’t made expressely clear, and this is where quantum meruit payments come in. Particularly if you are in construction, sometimes the work you perform is not specifically referred in the contract’s terms. Therefore there is not a specified amount for you to receive in payment. This may be because it is outside the scope of work agreed upon or you were contracted for the payment of a ‘reasonable sum’. In these circumstances, you may be able to lodge a quantum meruit claim. Read on to find out what you need to know about quantum meruit claims and their features.
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Quantum Meruit Claims: What Are They and When Can They Arise?
Usually, a contract has a clause that determines your work’s value. However, there are circumstances when instead you will be eligible to receive a ‘reasonable sum’. A quantum meruit claim may apply in the following situations:
- The contract does not include a price for the work performed
- The initial work does not include the work you have performed
- The contract no longer exists because the contract becomes unenforceable because it is void, voidable or frustrated
- Either party has terminated the contract, however, some work has already been performed
- If you perform the work under a heads of agreement rather than a contract
A quantum meruit claim can arise if one of the circumstances above exists. Therefore, you will be able to make a claim for a ‘reasonable’ sum for the work performed.
What Is a Reasonable Sum for a Quantum Meruit Claim?
As mentioned earlier, a quantum meruit claim will enable you to be paid for your work. Evidence of costs accumulated by undertaking the work and analogous work under other contracts you have performed can form the basis of the ‘reasonable sum’ that you charge. If you go to court, the court will consider the following factors in determining the ‘reasonable sum’ for you to be able to claim:
- What the ‘commercial value’ of the work you undertook.
- Whether the contract or heads of agreement indicate a formula or method for determining the value of work.
- The quality or value of the work that has been performed.
Is There Anything That Can Prevent Me From Claiming?
Chiefly, you must prove that you can make the claim. If you agreed that you are only eligible for a fee for completed work then you may be precluded from making a quantum meruit claim. Alternatively, you are also ineligible if you do additional work where you agreed there would be no fee. Furthermore, if you have acted in bad faith then you are also ineligible from making a quantum meruit claim. A recent case in the High Court imposes a further limit on quantum meirut claims where contractual rights to payment have accrued.
Mann v Paterson Constructions Pty Ltd [2019]
Last year, the High Court placed limitations on the use of quantum meirut for incomplete contracts. In this case, Paterson Constructions had applied for, and succeeded in a quantum meirut claim. This was because a building contract had been repudiated prior to completion. On appeal, the High Court found that the building contract allowed for contractual payments and was not therefore covered by quantum meirut. That is, the contract was broken down into stages where money was payable upon completion of each stage. The building company subsequently could only be compensated for works (or stages) completed in the contract.
Conclusion
A quantum meruit claim can provide you with compensation when there is no specified amount for the work performed. However, as recent cases show there are limits to what you can claim. If you are unsure how to proceed, get in touch with a construction lawyer to assist you in making your claim.
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