“Quantum Meruit” sounds like it has something to do with outer space or physics. It doesn’t. It’s actually a Latin term that has two soul-stirring meanings. The first of which is “respect earned.” Doesn’t that just make you feel extra cool? The second meaning is a definition accepted by legal scholars, “As much as he has earned.”
With either meaning, the basic concept remains the same. In a given situation the court will award damages to a claimant based on the value of the work performed.
What is Quantum Meruit?
For example, let’s say a property owner enters into an agreement with a contractor to build a fence around their property. At the start of the project, the property owner and the contractor never specify the amount of money the contractor will get paid for completing the fence. The question here is: What happens when the property owner refuses to pay the contractor? Or: What if the two parties can’t agree on how much the contractor should be paid?
One option the contractor may have is to sue the property owner under the theory of quantum meruit. In situations such as this, the judge or jury could calculate the amount to be paid based on the time and usual rate of pay by implying that a contract existed.
It may be reasonable to mention that quantum meruit is often and understandably confused with the concept of unjust enrichment. Unjust Enrichment is also a theory of relief based on a person profiting at another’s expense and should be made to make restitution for the value of the profit. Where the two theories diverge is that with unjust enrichment, there may not have been any form of agreement at the start, whereas, with Quantum Meruit, there was an agreement but that agreement did not specify a price for the work.
Quantum Meruit is often pleaded as a claim in cases where the claimant believes there has been a breach of contract.
How is Quantum Meruit Different from Breach? Unjust Enrichment?
Now, Quantum Meruit could be easily confused with Unjust Enrichment. Let’s clear up the differences. Unjust Enrichment occurs when one party of a contract is enriched or gets some gain at the expense of another party under circumstances that a court would see as unfair. The remedy for unjust enrichment exists so that the the party who has profited off of the expense of the other party does can not keep the unjust profits.
One of the differences between the two theories lies in the award entitlement for the party who’s been taken advantage of. With quantum meruit, the amount that the victim could be awarded would be a calculated amount equal to the local rate in that given industry, including factors such as material cost. In the case of Unjust Enrichment, the victim would be awarded damages for the value of the actual work performed.
How Does Quantum Meruit Compare to Other Payment Remedies ?
The question is, can you use Quantum Meruit to get paid what you’re owed and how. Quantum meruit can definitely be an option for recovery. That’s the simple answer. However, mechanics liens are much cheaper and much faster. Also, the disputes are often resolved shortly after a lien is filed, rarely ever making it to a courtroom.
To add onto that, states have other remedies for nonpayment such as prompt pay and retainage laws. These options are typically tailored a bit better for construction disputes. But beware of the potential damages that could come out of these laws. For instance, interest penalties. A contractor could end up paying a subcontractor interest for each payment not made within the structure of the contract. Those penalties begin accruing from the day after the payment should have been made.
With so many different legal ways of recovery like prompt payment, retainage, or even breach claims, Quantum Meruit should be viewed as a fallback plan. Because Quantum Meruit is more of a legal theory, it does not guarantee you’ll get paid after spending lots of money and time in court. Furthermore, there are other steps you can look at taking before even a lien claim or lawsuit. Including sending demand letters or notices of intent to lien.
At the end of the day, while Quantum Meruit can be a useful tool, but it may be best used as a backup. Before you go down the Quantum Meruit route, remember that you have a good number of other options at your disposal. These other options often seem to give you more weight to push around creating more pressure to get you paid.