INTRODUCTION
A breach of contract refers to the act of either of the parties failing to fulfil their responsibility as mentioned in the contract. The Indian Contract Act, 1872[1], provides five remedies for such a breach. One of the remedies available is the suit upon quantum meruit. It was in the 17th century that the doctrine of quantum meruit was developed by the Royal Court of Chancery in England. The term originates from Latin and in the simplest words means ‘as much as one deserves’. It is based on the premise that the party that has rendered any service must be remunerated equitably by the party that benefitted from it.
Interestingly, the principle applies even to cases where a legal contract does not exist per se. The doctrine developed by the Royal Court of Chancery in England allowed a person to recover or collect for other valuable acts performed without a contract, such as the delivery of goods or money[2]. Eventually, it was adopted by the courts of the various colonies of England, India being one of them. Further in the blog, we will explore the different circumstances where this remedy is applicable and how it differs from unjust enrichment.
APPLICABILITY OF QUANTUM MERUIT
The remedy of quantum meruit gains relevance when the actions or services rendered by one party benefit the other party but the former receives nothing in return. Here, the party that benefits is fully aware that the services are not being provided free of cost. For example, a mango seller is left with excessive stock which may go to waste if not sold so he decides to sell them at 20% of the price. Even though his urgent need has led him to sell the mangoes at such low costs, he still expects to receive 20% of the price. Therefore, he can file a suit upon quantum meruit against a customer who refuses to pay for the mangoes he obtains from the mango seller. This depicts the working of the doctrine in the absence of a formal contract.
Under contract law in India, the suit upon quantum meruit arises where a part of the contract is performed by one party and then there is a breach of contract or it is discovered that it is void or becomes void[3]. Let us look at each of these circumstances using examples.
- Breach of contract.
A hires B as a contractor to build a four-storey house for him promising 1 lakh per floor. B agrees and gets to work the following day. After two floors have been constructed, A realises he does not need another two to be built and therefore asks B to stop and refuses to pay him any money. He justifies this by claiming that the contract required B to build four floors, thus, B still needs to fulfil his obligation towards A. B files a suit upon quantum meruit against A. Here, the Court will hold that although the contract required B to build four floors, A prevented B from continuing his work and thus, fulfilling his part of the contract. Therefore, B must be renumerated in proportion to his services. Consequently, he should be paid an amount of two lakhs by A for his service of building two floors.
- The contract is discovered void.
Mr Dog is a dog food-producing company. Its delivery agent had to deliver 10 kilograms of dog food to B, a regular customer and a pet shop owner. Mistakenly, he leaves the package of dog food at C’s house. C owns a dog, uses the delivered dog food to feed his dogs, and even feeds the strays with an unexpected delivery. Here, Mr.Dog can file a suit upon quantum meruit against C since the contract existed between Mr.Dog and B. Therefore, C will be liable to compensate Mr Dog by paying for the 10 kilograms of dog food.
- Indivisible contract with improper performance.
A enters into a contract with B to organize a birthday party for his daughter. B is told to make the best arrangements possible and is promised a payment of Rs. 20,000. Every guest enjoys the food and admires the decoration. However, there were six incidents where the guests fell while sitting on chairs provided at the dinner table. In this case, B can claim the entire sum promised to him, however, A possesses the power to deduct a certain amount from the promised sum for the improper performance on B’s part.
These examples cover some of the different situations where a breach occurs and how it is remedied by the suit upon quantum meruit.
QUANTUM MERUIT AND UNJUST ENRICHMENT
There have been numerous confusions about quantum meruit and unjust enrichment. Often, the terms have been used interchangeably. Both theories have the goal of preventing one party from taking advantage of another and receiving services without paying their fair value[4]. The primary distinction between the two is that quantum meruit is a remedy provided in case of a breach. On the other hand, unjust enrichment is a term used in Contract Law that describes benefits that have not been earned honestly and must not be kept. Next, quantum meruit has a relatively narrower scope and extends only to goods and services. Unjust enrichment covers various aspects such as property, assets, money, and other benefits. Let us understand the workings of the two principles using an example.
A mistakenly delivers 100 kilograms of Sheesham wood at B’s residence. B gets the timber made into furniture and sells it at great profits. In this case, a suit upon quantum meruit will enable A to get the value he paid for the 100 kilograms of timber. Unjust enrichment, however, will be directed towards the original value and the benefits received (profits in this case) to be returned to A.
Hence, it can be concluded that quantum meruit focuses specifically on the value of the services rendered in an implied contract and unjust enrichment is based on preventing any unfair gain to any parties.
CONCLUSION
In conclusion, it can be said that colonial rule has also proven beneficial in certain aspects. The doctrine of quantum meruit is one such example. It provides an important remedy in cases of breach of contract or when services are rendered without a formal contract. It ensures that a party is compensated fairly for the services or goods provided to another party. It is important to distinguish quantum meruit from unjust enrichment, as contract law has different purposes. Understanding the applicability of quantum meruit and its differences from unjust enrichment is crucial for effectively addressing breaches and ensuring fair compensation in contractual relationships. The awareness of such principles is integral to common citizens so they become more independent and can fearlessly demand equitable payment for the services they render.
Author(s) Name: Suhaani Bajpai (ILS Law College)
Reference(s):
[1] Indian Contract Act 1872
[2] Quantum Meruit (Encyclopedia.com, 12 July 2023) <www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/quantum-meruit/2023/07/index.html> accessed 17 May 2024
[3] Priya Kalpashu ‘Meaning of Quantum Meruit under Indian Contract Act,1872’ (complybook, 26 April 2020) <https://www.complybook.com/blog/meaning-of-quantum-meruit-under-indian-contract-act-1872/2020/04/index.html> accessed 18 June 2024
[4] ‘Quantum Meruit’ (legaldictionary.net, 5 October 2015) < https://legaldictionary.net/quantum-meruit/#ftoc-heading-5/2015/10/index.html> accessed 18 May 2024
