What is Quantum Meruit

“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?

The definition of quantum meruit, according to the Legal Dictionary, is

In the law of contracts, a doctrine by which the law infers a promise to pay a reasonable amount for labor and materials furnished, even in the absence of a specific legally enforceable agreement between the parties.

For example, let’s say a property owner hires 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 common law theory of quantum meruit. Quantum meruit claims are typically used when there is no valid contract between the parties. Whether there was never a formal contract to begin with, or the existing construction contract is unenforceable.

Establishing a quantum merit claim

The specifics elements can vary slightly according to state law. However, the general principles of quantum meruit in the United States are the same. There are four basic elements that must be proved in order to be successful.

  1. Valuable services have been provided;
  2. Services were provided to the defendant;
  3. The defendant accepted, used, and enjoyed the services; &
  4. The defendant was aware that the party providing the services expected to be paid by the defendant.

If these four elements are successfully proved, the court will declare an implied contract. As opposed to an express contract between the parties. Under such circumstances, the amount that the plaintiff will be able to recover will be calculated by the reasonable fair market value of the services provided, at the usual rate of pay.

How is quantum meruit different from unjust enrichment?

Now, quantum meruit is often, and understandably, confused with the concept of unjust enrichment. Let’s clear up the differences.

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. This 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. This ensures that the party who has profited off of the expense of the other party does can not keep the unjust profits.

How the claim can arise

One of the differences between the two theories lies in how these obligations arise. Under a quantum meruit basis, there needs to be some acceptance or “assent” on the part of the person receiving the benefit. As for unjust enrichment claims, there is no requirement of a promise, acceptance, or agreement to do so. Obviously with some limitations! 

They are both equitable remedies, but seen through different lenses. A claim for quantum meruit is based on the expectations between the parties. While a claim for unjust enrichment is based on a societal interest of preventing injustice by allowing the party receiving the benefit to not pay,

How damages are awarded

The other main difference between these two doctrines is the award of damages, or the amount due. Under a quantum meruit claim, the amount recoverable will be based on the reasonable value of services that were provided.  However, under an unjust enrichment claim, the amount recoverable will be limited to the value of the benefit received; which may not always be as much as the services that were provided.

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, and are usually paired with breach of contract claims. 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. In the construction industry, claims of quantum meruit and breach of contract are typically used when a contractor can’t file a mechanics lien.

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.

Bottom line

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, quantum meruit can be a useful tool. But it may be best used as a backup if mechanics lien rights are lost. 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.

Summary
Article Name
Construction Payment Remedies: What is Quantum Meruit?
Description
When unpaid, a claimant will do whatever it takes to recover what they're owed. But is Quantum meruit a potential basis for recovery?
Author
Publisher Name
levelset
Publisher Logo