Quantum Meruit Under Indian Contract Act

Written By :- Aparna Raje Pathak ( Amity Law School )

There is a possibility of breach of the contract when parties enter into a contract  will arise over several reasons. It is necessary that the remedies should either be provided or should be given by any Law in order for any breach of a contract to happen. From the five provisions relating to the aggrieved party, one is a quantum meruit suit. The operation of such a remedy requires a detailed understanding of quantum meruit and its nature. Also, the usage of quantum meruit should be understood as to when and when this can be done or when the aggrieved party can use it.

Significance of Meruit Quantum

Quantum meruit is a term in Latin and is related to the 1872 Indian Contract Act.

It implies “what one has earned” or “as much as one has earned.” In simpler words, the real value of the services provided or performed is referred to.

This legislation implies a promise to pay a fair price for the work and equipment provided, even though there is no clear contract. The Dictionary of Black Law notes that quantum meruit means ‘as much as one deserves.’

The Quantum Meruit Theory

Quantum meruit covers situations in which someone gets a profit and nothing is earned by the other party. In contracts, this applies to the gain or enrichment earned by one party as a consequence of the conduct of the other party. In other words, it means the other party who got the services are unjustly benefited and must be returned to the party that has given such advantage.

Suit for Meruit Quantum

Quantum Meruit is a quasi-contract assertion. In a breach of contract, the recourse to a party is the quantum meruit lawsuit. The quantum meruit lawsuit occurs when one party performs a part of a contract and then there is a breach of contract or the contract is discovered to be invalid or void.

The aggrieved party can sue a quantum meruit lawsuit and may claim payment to the amount of work done made in following cases:

Where work in the execution of a contract has been performed by one party but the other party refuses to conduct its part. Or prevent the person from carrying out the contract. Seema was the owner of a music publishing company, for example, and she entered into an agreement with Veer to write a music series to be published by the music publishing house. The first music album was released before the PU, but but the music publishing house was closed before the second music album was written. Here Veer for the part already published can say quantum meruit. He is entitled to a lawsuit because the other party has somehow stopped him from doing his part and the other party has broken the terms of the contract by failing to pay him the amount he needs.

Section 65 of the Indian Contract Act, 1872 addresses the situation where work has been performed in the execution of the contract, but it is later discovered that the contract is null or void. Where a person enjoys the advantage of a non-free act (given or obtained without payment but where the party has been obliged to pay), despite the fact that there is no express agreement between the parties then the person who has enjoyed the benefit has to compensate the other party or restore the thing so delivered.

In such a case, a reasonable remuneration is due and what is a reasonable remuneration would be decided by the Court and this reasonable remuneration is the quantum meruit, where the contract is implied or communicated to provide services but there is no agreement with regard to remuneration. Under Section 70 of the Indian Contract Act, 1872, this idea is clarified.

  • Where the contract is divisible, and a party to the contract has done its part, he may sue other parties who have not performed for quantum meruit.

This rule even applies to a person who is claiming quantum meruit and himself is guilty of the breach of the contract, but the following two conditions should be fulfilled for that:-

  • The contract must be divisible
  • The other party must have enjoyed the benefit of the part which has been performed, although he had the option of declining it.

If the contract is indivisible and done in a bad way, the party can demand a lump sum amount by default and can decrease the amount of the bad work performed if the following conditions are met :-

  1. There should be an indivisible contract,
  2. For a lump sum, the deal should be
  3. The contract should be fully enforced and,
  4. The contract was poorly executed.

Quantum Meruit vs. Unjust Enrichment

It is very common for people to get confused between the two concepts. Both the concepts discuss the aim of preventing one party to perform the contract and the person preventing the other takes advantage of the services received without even paying for their values.

The difference between the two concepts is that the unjust enrichment deals with issues where there is a failure to pay for the services and quantum meruit deals with such issues where the fair or reasonable amount should be paid.

To be successful in a suit upon quantum meruit, the service provider i.e. plaintiff must prove that the receiver of the services i.e. defendant agreed to the provided services, knowing that he has to pay the plaintiff for the services provided and that the defendant was unjustly enriched, which means he received something for nothing. In simpler terms, it means that he received for the services but did not pay in return, which was not the agreement. The amount given in a suit upon quantum meruit, especially where there is no written contract specifying an amount, is generally based on the fair market value for the services rendered.

Legislation on Cases

The plaintiff entered into an arrangement in this case to write a book about the defendant.100 pounds was agreed to be paid upon completion of the work. The plaintiff began writing the book and completed a substantial portion of it. The defendant subsequently decided not to continue with the work and declined to pay the plaintiff money, even though the plaintiff was ready and willing to perform the work. It was held that the plaintiff is entitled to claim the money as the defendant has refused to perform his part of the contract.

A builder was the plaintiff. He entered into a contract to build two houses and stables for approximately £ 560 on the defendant’s property. He told the defendant that he did not have any money while the buildings were still in an unfinished condition. He therefore declined to work and only approximately £ 300 of work was done. The plaintiff asked for half of the money, half of which half of the work done from the defendant. The defendant refused and the plaintiff filed a case.

Judgement

It was held that the defendant had no choice apart from accepting the building like this and he couldn’t keep the building like this forever so he completed the work. In this case, the contract stated that the money had to be paid in lump sum after the completion of the work and so the plaintiff could not be granted the payment after only doing part of the work. And also as there was no fresh contract so the plaintiff cannot recover on the basis of quantum meruit

The relevance of this case was that a person can only recover a part of his work when the contract is not a lump sum and the owner freely accepts the work. Here it was not free, instead, he did not have any choice.

Conclusion

It is obvious, after a careful review of the remedy of quantum meruit, that the law demands that it be fair and rational. The principle encourages the equality of the parties and seeks to ensure that if a person performs a service or a product, then he can receive the benefit of the contract and, if that person receives nothing, then that person may use the remedy by filing a lawsuit.