Introduction
When parties enter into a contract, not every situation fits neatly into the framework of offer, acceptance and consideration; there is a chance for breach of contract. The deals made between humans are sometimes messy, incomplete and interrupted, and the law cannot ignore such realities. A breach of contract refers to the non- fulfilment and failure to perform the obligations and terms and conditions by a contracting party. For every breach of contract, the law contemplates the grant of an appropriate remedy to restore fairness between the parties. When one of the parties makes a breach of contract, a total of five remedies are available for the aggrieved party, out of which one is a suit for ‘Quantum Meruit.’ Invoking quantum meruit as a remedy before a court demands a comprehensive understanding of law, assessment and a nuanced appreciation of contractual obligations. Moreover, clarity regarding conditions and a proper understanding of when and by whom the principle of quantum meruit can be claimed by the aggrieved party is equally necessary.
Meaning of Quantum Meruit
Quantum Meruit derive its source from the Latin phrase signifying “what one has earned” or “as much as he earned.” In the context of contract law, it denotes a demand or a right to claim compensation for the services and work rendered or performed by the aggrieved party in a contract.
Normally, a perceived notion is known to everyone in society that when a person partially performs his duties, he is not entitled to claim remuneration in a contractual relationship. However, quantum meruit is an exception to this rule, recognised by law to ensure fairness among the contracting parties.
Alderson Baron explained that between the contracting parties, where one of the parties has wholly declined to perform its duties and fulfil its obligations or makes the performance impossible, the aggrieved party may either sue the guilty party for breach of contract, abrogate the contract or claim to recover payment under quantum meruit for the work performed.[1]
As per Black’s Law Dictionary, the expression quantum meruit means “as much as he deserves,” indicating a claim for reasonable payment for the rendered service by the aggrieved party.[2]
Principle of Quantum Meruit
At its core, quantum meruit is guided by the principle that fairness must prevail in contractual dealings and unjust enrichment must be avoided. It is based on the idea that no person is permitted to enjoy the benefit of others’ work without paying reasonable compensation. It functions on the equitable principle and does not allow one party to be unjustly enriched at the cost of the other party.
In Puran Lal v. State of U.P.,[3] It was stated that quantum meruit serves a restitutory function, aimed at reimbursing the plaintiff for the value of services rendered and preventing loss by restoring the pre-contractual position.
Illustration: A enters into a contract with B to paint his house for Rs. 50,000. After completing half of the work, B wrongfully terminates the contract. Here, A can claim quantum meruit for the reasonable part of the work done by him. He is entitled to a claim because he was somehow prevented from performing his part of the work, and A has breached the contract by not paying him the amount he deserves.
The application of this remedy demands two essential actions:
- There must be a subsisting contract under which one party either breaches the contract or prevents the performance of obligations, making it impossible for the other party to continue performance.
- The non-defaulting party, having rendered partial performance, must treat the contract as discharged and institute a claim for reasonable compensation for the work already completed.
Practical Application of Quantum Meruit
In its true character, quantum meruit as a remedy derives its foundation from quasi-contractual principles. It operates independently of a valid contract and may be invoked in circumstances where a plaintiff has performed work under a void agreement. In cases where a contract is declared invalid on technical grounds or invalidity, the principle of quantum meruit allows recovery of reasonable payment by assuming an implied contract and fills the legal gap.
Under Section 65 of the Indian Contract Act, 1872, it is stated that “when an agreement is discovered to be void, or when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it, or to make compensation for it to the person from whom he received it.”[4] It covers situations where work has already been carried out in performance of a contract that is subsequently found to be void. In Craven-Ellis v Cannon Ltd, Greer LJ explained that the responsibility to compensate for work carried out without a binding agreement is created by legal principles themselves and not from any presumed consent arising out of the receipt of services, placing such claims within the realm of quasi-contracts.[5]
Illustration: A mistakenly delivers bricks to B’s house. Even after knowing that it does not belong to him, he uses the bricks. Here, B is liable to compensate A even if there was no contract between them.
Section 70 of the Indian Contract applies where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such other person enjoys the benefit thereof, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or delivered.[6] This rule is applicable in cases where a contract- either implied or express- required a person to render services, but does not specify the amount of payment, the party providing the service is entitled to receive reasonable remuneration.
Illustrations: 1. Ram agreed to do fencing work on the boundary of the side walls of Shyam for a lump sum of Rs . 10,000. Ram only fenced one of the side walls and then stopped work without giving any valid reason. Shyam later got fenced in by Raju on the other side walls. Since the contract was complete, payment was to be given only after the completion of work. In this case, Shyam cannot claim for the work which he had done as he was entitled to the payment only after completion of the work.
Raju agreed to supply 800 bricks to Piyush. Raju only delivered 200 bricks, Piyush accepted the bricks and used them, though the contract was not fully performed. In this situation, Raju can recover payment for the 200 bricks supplied.
Conclusion
Overall Quantum meruit occupies a significant place in contract law and highlights the balance between contractual certainty and equitable justice. While contracts are governed by strict legal rules, this doctrine ensures that one party does not unfairly profit from the services of the other party. By recognising reasonable compensation, the doctrine reinforces the broader objective of contract law- to maintain trust, fairness and strengthen the moral and legal foundation of contractual relationships.
Author(s) Name: Gauri Singh (University of Lucknow)
References:
[1] De Bernardy v Harding (1853) 3 Ex 822, 826.
[2] Bryan A Garner (ed), Black’s Law Dictionary (11th edn, Thomson Reuters 2019) sv ‘quantum meruit’.
[3] Puran Lal v State of Uttar Pradesh AIR 1971 SC 712, 715–16.
[4] Indian Contract Act 1872, s 65.
[5] Craven-Ellis v Canons Ltd [1936] 2 KB 403 (CA) 412.
[6] Indian Contract Act 1872 s 70.
