QUANTUM MERIUT

QUANTUM MERIUT

Author: V. L. V. Chaitra,
BBA LL.B 1st year,
Birla Global University, Bhubaneswar.

QUANTUM MERIUT
QUANTUM MERIUT


    introduction

            Quantum Meruit is a Latin term which means “as much as deserved”[1]. In legal language, quantum meruit refers to the determined value of the services performed and paid. In the Law of Contracts, quantum meruit is a doctrine that implies a promise or agreement to pay a fair sum for labor and provided materials. This doctrine comes into effect even if there is a doubt as to the amount due for the work done under circumstances and also occurs were no specific lawfully enforceable agreement between the parties involved and payment is not done correctly when the act was done non gratuitously. It refers to a method of determining how much should be paid for products delivered or services rendered when no contract or agreement specifying an appropriate payment amount.

    HISTORY

    The doctrine of quantum meruit was developed in the 17th century by The Royal Court of Chancery in England. This court worked apart from the common-law courts to grant relief that was due under general principles of fairness however, it could not be obtained under the strict legal precedents of the common-law courts. The Chancery Court developed quantum meruit along with different equitable doctrines that allowed an individual to recover or collect for different valuable acts performed without a contract, such as the delivery of goods or money. Some of the first cases of quantum meruit involved recovery by persons in so-called trades of common callings, such as innkeepers, tailors, blacksmiths, and tanners. As service industries have increased the claims for recovery under this doctrine have also increased[2].

    CASES WHERE QUANTUM MERUIT ARISES


     The following are the various cases in which claim for quantum meruit arises:
    (    a)    Where contracts become void: According to section 65 of the Indian Contract Act,1872
    “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.”[3]
     This section says that when an agreement is discovered to be void or becomes void, any person who received or enjoyed the advantage or services rendered by the other person is entitled to pay compensation to the person or the party whom it is received.
    Illustration: if M comes into contract with N that M will deliver 100 bikes to N before November 30, 2019. But M delivers only 50 bikes before the said date and M came to know that N is of unsound mind at the time of entering into the contract and stopped delivering the remaining. When N is of unsound mind at the time of entering into the contract, the contract becomes void. But N is bound to pay M for the bikes received by N.
    (     b)  When the act is done Non-gratuitously: According to Section 70 of the Indian Contract Act,1872
    “Where a person lawfully does anything for another person, or delivers anything to him, not intending to do so gratuitously, and such 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.” [4]
    The following are the essential conditions of the section:
    ·       The thing must be done lawfully.
    ·       It must be done by a person not intending to act gratuitously
    ·       The person for whom the act is done must enjoy the benefit of it.
    Illustration: X, a university chancellor ordered Y an interior designer to design the seminar hall for the university immediately. After completion of act X denied paying for the work done by Y.  now Y can file for compensation under quantum meruit for work done by him as the act was done non gratuitously.
    (     c)   When the contract is incomplete: there arises some situations in which either of the parties unable to perform the contracts. The contract is valid but due to some reasons, the contract is breached. Here arises the quantum meruit. It is used to determine what amount should be paid for the services rendered or benefits provided by one party to the other.
    Illustration: P an auditorium owner comes into contract with Q a singer that Q should give her program every Saturday for 10 weeks. Q has given her performance for 6 weeks later she got ill and unable to give her performance. Here there is a breach of contract i.e., the contract is incomplete. But P is bound to pay for Q for the services rendered by Q for the 6 weeks.

    ANALYSIS OF QUANTUM MERUIT UNDER DIFFERENT JURISDICTIONS

    1. TEXAS[5]: In Heldenfels Brothers V.The City of Corpus Christi, it was held that recovery under the doctrine of quantum meruit needs proof of four elements: 
    (   1)   The claimant provided either valuable services or materials or both; 
    (   2)   The services and/or materials were supplied to the party sought to be charged;
    (   3)   The services and/or materials  were accepted by the party sought to be charged, 
    (   4)   The services and/or materials were rendered and accepted under such circumstances that the party accepting the services and/or materials was reasonably notified that the plaintiff, in performing, expected to be paid by the party who accepted the services and/or materials.
    The proper measure of damages for a claim in quantum meruit is the reasonable value of work performed and the materials furnished.
    2.  LOUISIANA[6]: The well-known remedy, quantum meruit, from a casual invocation in a very few early Louisiana cases, this phrase, means “as much as he deserved,” has increased rapidly to the point of being one of the most frequently sought after forms of relief. Though quantum meruit may be a handy label to utilize any numbers of circumstances, its career in Louisiana has been marked by confusion and inconsistency, both as to the proper instances for its application and regarding the correct measure of recovery.  This is applies in large measure to the fact that having once borrowed quantum meruit from the common law, our courts have revised its theoretical and practical application in an attempt to render the remedy consonant with the Civil Code.  
    3.  MALAYSIAN[7]:  Act 36 -Contract Act 1950(Malaysia) claims under circumstances explained above is further supported by the content of Malaysian contract act 1950 and specifically the content of section 71 which states: ‘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 benefit thereof, the latter is bound to
    make compensation to the former in respect of, or to restore, the thing so done or delivered’
         
           The definition of Quantum meruit in the Malaysian context is that the determination of the importance of service extended based on the amount of the work and the rate of work existing there for similar work when an agreement or contract is not existing between the parties. This Latin word ‘ kwahn-tuhm mare-ooh-it’ means “as much as deserved.
                A claim for payment under quantum meruit usually arises in one of the two circumstances, either when a contract is silent on how work is done is remunerated or paid or where the contract contains an express agreement to pay a fair and reasonable sum or on the similar term. 
               A claim for payment under the doctrine of quantum meruit is usually presented as a claim in the alternative. It is said to be a quasi-contractual claim under where the claimant seeks to be compensated for an amount representing the reasonable sum for works, he had already completed.
    Example:
    (a) Where the contract has been held to be discharged by frustration.
    (b) Where the work is done with the absence of a contract.
    (c)Where the contract becomes void.
    4. CANNADA[8]: In this country, quantum meruit is not based on contract law but depends on the equitable principle of unjust enrichment. Estoppel allows an implied promise would not create a cause of action. Instead ‘quantum meruit’ is based on the need to prevent the other party from unjustly enriching himself by allowing the fence builder to proceed with the work based on an assumption that he would be compensated.
    5. CALIFORNIA[9]: In California, the necessary elements of quantum meruit are the plaintiff acted according to an express or implied request for service by the defendant, and the service rendered benefited the defendant.
    A common count is based on the same facts as an express cont. for breach of contract normally also fails to state a cause of action. like in the case of Lambert v. southern counties Gas Co.
    6.  UNITED STATES[10]: In the United States, the elements of quantum meruit are determined by state common law. For example, to state a claim for unjust enrichment in New York, a plaintiff must charge that the defendant was enriched; the enrichment was at the plaintiff’s expense; the circumstances were such that equity and good conscience require defendants to make restitution.

    CASES ON QUANTUM MERUIT


    1.     Montes v. Naismith and Trevino Construction Co.,[11]
    This case illustrates how quantum meruit works. in August 1968, Abraham Montes began oral negotiations with Abdon Perez regarding improvements of his farmhouse. Perez testified that Montez brought a contract to him more than once, but the contract was ever complete and no contract was ever signed. Despite the lack of a contract, Perez arranged for the Naismith and Trevino construction company to do work in Monte’s house. Montez paid $1,800 Perez and Perez withdrew from the transaction.
            Naismith and Trevino made improvements in Montes farmhouse for a value of $3,835. Montes refused to pay for the improvements. Naismith and Trevino brought suit against Montes arguing that even though they did not have a contract with Montes, they should be paid for their labor and the materials used in making improvements to his house. The court agreed and entered judgment for Naismith and Trevino in the amount of $1,760, the amount of the services and materials provided by Naismith and Trevino less the amount Montes had paid to Perez. The court based its ruling on the theory of quantum meruit.
    2.     Mahanagar Telephone Nigam Ltd. V. Tata Communications Ltd. [12][13]
    In the present case, the contract was between Mahanagar Telephone Nigam Limited (MTNL) and Tata Communications Limited (TCL) regarding a purchase order. It was mentioned in the contract that liquidated damages on the purchase orders are restricted to 12% of the purchase value in case of breach of contract.
    However, TCL did not fulfill its obligations of contract which resulted in the loss by MTNL. Subsequently, MTNL deducted certain amounts of money from the invoices raised by TCL.
               TCL filed a suit against MTNL in the Telecom Disputes Settlement and Appellant Tribunal (TDSAT), stating that the monetary amounts subtracted by MTNL did not agree with the monetary amounts mentioned in impugned purchase orders. MTNL argued stating that such sums are due under ‘quantum meruit’. TDSAT passed an order to return the ‘quantum meruit’ claim which was beyond 12% liquidated damages since it was separately charged by MTNL without clearly establishing that it had suffered any damages warranting the quantum meruit claim. MTNL accordingly approached the Supreme Court to appeal the decision of the TDSAT.
             
    Issue: The issue in the present case is ‘whether claim in quantum meruit would be permissible in cases where the parties are governed by the contract
    Judgment Analysis:
             Chapter V of the Indian Contract Act, 1872 pertains to “certain relations resembling those created by contract”. This chapter contains provisions where there is an absence of contract between the parties. This chapter speaks about ‘quasi contractual obligations’ between parties.
           Chapter VI of the Indian Contract Act, 1872 deals with remedies for breach of contract, like damages due to breach etc.… this chapter also covers penalties and compensation.
           Section 70 of Indian Contract Act pertains to circumstances in which a non gratuitous act by a person leads to formation of commitments on other party who benefits as a result of such an act. This section is similar to quantum meruit.
          In present case the Supreme Court while considering section 70m in a contractual claim referred to the verdict of ‘Mosselle Solomon v. Martin & Co[14].’ where Williams J. had held that sedction 70 is an independent remedy based on cause of action and therefore can be deemed to be an additional remedy. Whereas Jack J. held that the provision had no applicability in the case of an express contract. However it was later observed that the principle enunciated Jack J. had been approved in the subsequent judicial decisions of ‘Kanhayalal Bisandaytal Bhiwapukarar v. V. Indarchandji Hamirmalji Sisodia’[15] and ‘Alopi Parshad & Sons Ltd .v .The Union of India’   [16], where High Court and Supreme Court respectively had held that section 70 cannot be availed of by a person who relies on an express contract.
        The Supreme Court in the light of above analysis held that the amount deducted by MTNL was acclaim of quantum meruit which cannot be raised due to existence of the contract. The remedy for breach of contract is   
    as per section 74 of ICA, which states that where a sum is named in a contract as a liquidated amount Payable by way of damages, only reasonable compensation can be awarded not exceeding the amount so stated. It also held that MTNL can claim only the sum stipulated in the contract.   

    CONCLUSION

                       The term “quantum meruit” is being used in a wide range today. But the meaning is not clear. However, appeal upon quantum meruit is basically a claim against the worth of materials supplied or services rendered below a contract that becomes void on account of breach of contract. The claim for quantum meruit may also arise in case of incomplete contracts. In whole it suggests one should get on basis of task performed.

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    [1] https//legaldictonary.net/quantum-meruit.
    [2] www.lawbrain.com/quantum-meruit.
    [3] Sir Dinshaw Fardunji Mulla, Indian contract act, 200.
    [4] Sir Dins haw Fardunji Mulla, Indian contract act, 200.
    [5] Contractlawsandpractice.blogspot.com/2015/09/quantum-meruit.html.
    [6] Contractlawsandpractice.blogspot.com/2015/09/quantum-meruit.html.
    [7] Contractlawsandpractice.blogspot.com/2015/09/quantum-meruit.html.
    [8] < span lang="EN-IN" style="mso-ansi-language: EN-IN;">Contractlawsandpractice.blogspot.com/2015/09/quantum-meruit.html.
    [9] Contractlawsandpractice.blogspot.com/2015/09/quantum-meruit.html.
    [10] Contractlawsandpractice.blogspot.com/2015/09/quantum-meruit.html.
    [11] https://law.jrank.org/pages/9598/Quantum-Meruit.html.
    [12] https://indiankanoon.org/doc/99989091/.
    [13] https://www.lexology.com/library/detail.aspx?g=c39230e4-f7dc-4f34-b197-71b0d625c513.
    [14] https://indiankanoon.org/doc/1969468/.
    [15] Kanhayalal Bisandayal Bhiwapurkar v. Indarchandji Hamirmalji Sisodia, AIR1947 Nag 84.
    [16]M/S. Alopi Parshad & Son, Ltd vs The Union Of India, 1960 AIR 588, 1960 SCR(2) 793 .

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