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Suit for Quantum Meruit

If any party refuses/fails to perform his part of contract or by his act makes it impossible to perform his obligation under the contract, he is said to have committed breach of contract.

Breach of contract discharges the contract and relieves the aggrieved party from performing his obligations and gives a right to claim damages

The Indian Contract Act provides remedies against the person who fails to fulfil his promise. A remedy is the course of action available to the aggrieved party (i.e. the party not at default) for the enforcement of a right under a contract.

Remedies for breach of contract include:

(a) Rescission of contract

(b) Suit for specific performance

(c) Suit for injunction

(d) Suit upon quantum meruit

(e) Suit for damages

In this article we shall discuss the provisions relating to Suit for Quantum Meruit

Meaning

Quantum Meruit means ‘as much as is earned’.

Right/Claim for quantum meruit means a right to claim compensation for the work already done.

Unlike suit for damages, the right to claim on ‘quantum meruit’ does not arise out of a contract. In fact, it is a claim on the quasi-contractual obligations which is implied by the circumstances. The claim for quantum meruit arises only when the original contract is discharged.

The claim for quantum meruit arises in the following cases:

a) In case of void agreement or contract that becomes void [Section 65]

When an agreement is discovered to be void or when a contract subsequently 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. In simple words, this is a case in which an agreement is either void-ab-initio or the contract becomes void at a later time. Hence, the benefit received by either party shall have to be returned to the other party.

Example: A pays ₹10,000 to B, in consideration of B’s promise to sell his horse to A. But unknown to both the parties, the horse is dead at the time of promise. The agreement is void and B must repay ₹10,000 to A.

b) In case of non-gratuitous act [Section 70]

i) The thing must have been done or delivered lawfully

ii) The person who had done or delivered the thing must have not intended to do so gratuitously; and

iii) The person for whom the act is done must have enjoyed the benefit of the Act.

Example: A, a trader, leaves certain goods at B’s house by mistake. B treats the goods as his own. He is bound to pay A for them.

c) In case of act preventing the completion of contract

If a party does not complete the contract or prevents the other party to complete the contract, the aggrieved party can sue on quantum meruit.

Example: C the owner of a magazine engaged P, an author, to write a book for him. Each chapter of the book would be published in the monthly issue of the magazine. C agreed to pay ₹5,000 per chapter to P. Actual payment to be made after all the chapters were published. But after publishing a few chapters, the publication of the magazine was stopped. P could claim payment on quantum meruit for the part already published.

d) In case of divisible contract

The party at default may sue on quantum meruit if the following conditions are satisfied:

(i) If the contract is divisible; and

(ii) If the party not at default has enjoyed benefits of the part performance.

Example: A agreed to supply dinner tiffin to B everyday for a month. B agreed to pay ₹300 per meal to A, total payment to be made at the end of the month. A supplied dinner for 5 days after which B discontinued the service complaining of diarrhea. A is entitled to recover money for 5 days as the contract is divisible and B had enjoyed benefits of part performance.

e) In case of indivisible contract performed completely but badly

The party at default may claim lumpsum less deduction for bad work if the contract is indivisible but is performed completely though badly.

Example: X agreed to decorate Y’s flat for a lumpsum of20,000. X completed the work, but Y complained of faulty workmanship. Y spent another ₹5,000 to correct the defect. It was held that X could recover only ₹15,000 from Y.

This article is a part of the book for CA Foundation Law
authored by
CA Preeti Aggarwal

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