quantum meruit

Quantum meruit is a cause of action that is available where a contract does not exist between the parties. The cause of action entitles a person to recover a reasonable sum of payment for the work performed. The cause of action exists to prevent unjust enrichment of a defendant which has received the benefit or value of goods or services in circumstances where it would be unfair (in the eyes of the law) for the defendant not to be paid for those goods or services.

A claim for quantum meruit (MARE-U-IT):

1. may subsist where there is no valid and subsisting contract between the parties;
2. usually involves a claim where a claimant has provided goods or services to the defendant in circumstances where there is no concluded legally binding agreement. The principles of quantum meruit have been applied in a wide variety of circumstances, including the HMRC in relation to excess taxation being paid;
3. must show that the defendant been enriched;
4. the enrichment was at the claimant's expense;
5. the enrichment was unjust.

In the event that factors 3-5 are proved by the claimant, the claimant is entitled to be compensated unless the Defendant has made out a defence to the claim.

General principles of English law apply to defences, such as:

1. there is a close causal connection between the payments made the enrichment of the defendant;
2. English law will not allow double recovery of damages;
3. quantum meruit claims will not be permitted to used to bypass contractual rights of the parties, or third parties to the dispute.

Application of Quantum Meruit

Quantum meruit may apply in situation where situation where the claimant has made a mistake - that a payment was lawfully due when it was not. The payment would not have been made if the claimant was aware that it did not have to be made, and the defendant was unjustly enriched by the payment. A relevant mistake made at anytime up to the time of payment may well be sufficient to make out a claim.

Assessment of the Quantum in the Meruit

The basic principle is that a claim for unjust enrichment is "not a claim for compensation for loss, but for recovery of a benefit unjustly gained [by a defendant] ... at the expense of the claimant": Boake Allen Ltd v HMRC [2006] EWCA Civ 25, per Lord Justice Mummery LJ.

When assess the value of the claim for unjust enrichment:

1. The starting point for assessment of the quantum is likely to be the market price or objective market value.
2. Market value is the price which a reasonable person in the position of the defendant was likely to pay;
3. The value of the enrichment is valued at the time it is received by the defendant.
4. The value is determined by reference the value of the services themselves, not of any end-product or subsequent profit made by the defendant.

Where there is a Contract

If a contract does exist between the parties, the sum of payment to which the claimant is entitled is determined by reference to the contract. Where there is a contract between the parties and the contract does not specify a sum to be paid, the law will normally imply a term into the agreement that the remuneration will be reasonable in all the circumstances of the case. The value of the reasonable sum would be determined by reference to the objective intentions of the parties (which are decided judicially, and are not the subjective intentions of the parties). at the time the contract was formed.

Drukker Solicitors is a commercial litigation law firm in London, which advises on civil lawsuits, commercial litigation, contractual claims and quantum meruit claims and defences.