Principle of Quantum Meruit under the Contract Act, 1872

Principle of Quantum Meruit under the Contract Act, 1872
26 April 2020

Principle of Quantum Meruit under the Contract Act, 1872

Quantum meruit is a Latin phrase that means “what one has earned” or “as much as he has earned”. In clear terms, it refers to the real value of the services performed or rendered. Quantum meruit is a lawful action that is based on equitable compensation. It is an alternative remedy to an action on a contract that can be brought for partial performance. A claim in quantum meruit can at best be explained as residual equity.

The Black Law Dictionary states that quantum meruit means “as much as one deserves”. Quantum meruit means payment in proportion to the amount of work done. Normally, one cannot claim performance from another unless one has performed his obligation in full. However, in some cases, anyone who has performed some work under a contract can claim remuneration for the work which he has already done. The right to claim on 'quantum meruit' does not arise out of contract as the right to damage does. It is a claim on quasi-contractual obligation which is implied by circumstances. The claim for quantum meruit arises only when an actual contract is discharged.

Quantum Meruit covers a case in which the party who gives the service has fulfilled a part, but not all of the work that he was bound to do and seeks compensation for the value of the work done. There are two essential conditions that must be met for this rule to be applied:

  1. Contract is discharged
  2. The claim is brought by the party who has not defaulted.

The action of Quantum Meruit is allowed in Indian Courts under Section 70 of the Indian Contract Act 1872, which states, "Obligation of person enjoying the benefit of the non-gratuitous act—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."

Quantum meruit is a claim under a quasi-contract. The claim of quantum meruit arises when the actual contract is discharged. The several cases in which quantum meruit arise are as follows :

  1. In the case of void agreement or contracts that become void [section 65].
  2. In case of a gratuitous act [section 70].
  3. In the case of a divisible contract.
  4. In case of act preventing the completion of the contract.
  5. In the case of an indivisible contract performed completely but badly.
Quantum Meruit And Unjust Enrichment

It is very usual that people get confused between the two concepts i.e.Quantum Meruit And Unjust Enrichment. Both theories discuss the purpose of preventing one party to perform the contract and the person preventing the other takes advantage of the services gained without even paying for their values.

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

Case Laws

Alopi Parshad and Sons Ltd. v. Union of India

In this case, The Hon'ble Supreme Court dealt with an arbitration award which awarded a certain amount on the ground of quantum meruit. But, the same was set aside and it was held that "Compensation under quantum meruit is awarded for work done or services rendered when the price thereof is not fixed by a contract. For work done or services rendered pursuant to the terms of a contract, compensation quantum meruit cannot be awarded where the contract provides for the consideration payable on that behalf. Quantum meruit is but reasonable compensation awarded on the implication of a contract to remunerate, and an express stipulation governing the relations between the parties under a contract, cannot be displaced by assuming that the stipulation is not reasonable.”

Mulamchand v. State of M.P.

In this case, the court held that, if under section 70, a claim for compensation is made by one person against another person, it cannot be on the ground of any subsisting contract between the parties but on a different kind of obligation.

Moselle Solomon v. Martin & Co

In this case, it was held that the remedy specified under Section 70 is not dependent upon the law regarding the liabilities of principal and agent. It is an independent remedy, which is based upon a different cause of action, namely, upon whether a person has legally done anything for another or has delivered anything to him with not an intention to do so gratuitously, and such other person has taken the benefit thereof. If so, he must either restore the thing so done or delivered or make compensation in respect of.

Conclusion

The Latin expression 'quantum meruit " is one of the most popular phrases used in law today. Unfortunately, the meaning is not so clear. The meaning varies slightly from one legal jurist to another. This is mostly based on different legal decisions that have interpreted the term. However, in a whole, it refers that one should get what he deserves to get on the basis of a task fulfilled.