Quantum Meruit

The Latin term quantum meruit, translates to “as much as he has earned,” and refers to the actual value of services rendered. The legal theory of quantum meruit holds that a person should not be obliged to pay, nor should the other party receive, more than the value of the services exchanged. This concept may be used as an equitable remedy in a civil lawsuit, often where the transaction for goods or services was done without a written contract specifying the amount due. To explore this concept, consider the following quantum meruit definition.

Definition of Quantum Meruit

Pronounced

kwahn-tuhm mare-ooh-it

Noun

1. Payment for the value of goods or services as partial fulfillment of a contract, or when there is no contract specifying a price in the transaction.

Origin

Latin    quantum meruit (as much as is deserved)

Use of Quantum Meruit

Many situations exist in which people receive services from someone else, often on an unexpected basis, without signing a contract for payment, or without first obtaining a price for those services, although a reasonable person would know that payment is expected. Examples of these situations include receipt of care by an emergency room physician, legal services without signing a fee agreement, or obtaining spur-of-the moment services of the neighbor’s gardener. In such situations there can be no doubt that the individual deserves to be paid for services rendered, but it is not uncommon for disputes to arise over the actual amount billed after the fact.

Acceptance of Services

A formal, written agreement is not required for a contractual relationship to exist. When one individual provides services to another, who has either requested those services, or freely accepted them, knowing they are not performed free of charge, a contract is seen to exist. In the event the person receiving services refuses or fails to pay, the provider of services may file a civil lawsuit seeking payment.

The plaintiff (provider) would need to show the court that the defendant (receiver) requested the services, or that he had an opportunity to decline the services if he did not want to pay for them. The rendering of services without giving the defendant an opportunity to decline does not generally constitution acceptance under the theory of quantum meruit.

For example:

Immediately following a hurricane that swamped the city, many residents found their basements flooded, and heating systems inoperable, as the storm left a cold front in its wake. Ronald, a contractor, was going door to door in the neighborhood offering his services as a contractor to get people’s furnaces going again. Mary gratefully accepts Ronald’s services, for which he had tentatively quoted a price of $500 plus parts. Ronald patched up Mary’s system, then moved on to the next house without waiting to get paid.

About a week after the storm, the city instituted a program to repair or replace residents’ damaged heating systems for a very low flat rate, in an effort to get people back on their feet. When Ronald’s bill arrived in Mary’s mailbox, she didn’t think it was fair to have to pay nearly $600, when Ronald’s fix was temporary, and the city had stepped up to replace her system. Ronald files a small claims lawsuit requesting payment for the services he performed, and the parts he provided.

At the trial, Ronald tells the judge that he was offering his services as a contractor in the wake of the hurricane. Mary agrees that he had quoted her a tentative price, which proves she did not expect to receive those services free of charge. The judge rules in Ronald’s favor, ordering Mary to pay for the parts and services she received. Otherwise, she would have received a benefit at someone else’s expense. The fact that the repairs were a temporary fix is not relevant, as that was the nature of the services offered and accepted.

Quantum Meruit When Work is Incomplete

In a situation in which a contract is entered into, but the services are not completed, the question of fair payment may be brought to the court. Incomplete performance on the part of the service provider may be due to many reasons, including something happening that makes performance of the service impossible. In a case of incomplete work, the theory of quantum meruit is used to determine whether payment is due, in what amount payment should be made, and which party should be paid.

The court’s decision in such a case depends on the specifics of the contract, what services were actually performed, and the circumstances which caused the termination of the work.

For example:

Harold and Maureen hire Jack to strip and re-seal their wood deck, accepting his bid of $3,000, and giving him a down payment of $1,500. When Jack is about three-fourths finished with the project, another contractor discovers damage to the house where the deck is connected, and advises the couple that the repairs will require removal of the deck. Harold immediately tells Jack to stop his work, and says he will let him know when they can continue.

When he hadn’t heard anything from Harold and Maureen a month later, Jack called, and was told they had decided not to finish the deck. Jack sent a bill, specifying the number of hours he had already put into the job, and asking for payment of $700 in addition to the down payment already received. Harold becomes angry and refuses to pay even a dime more.

At trial in small claims court, Jack shows the judge the contract, which consists of a written estimate for the time to complete the job, and the price for labor. Harold had filed a counterclaim asking for return of his $1,500 deposit. In ruling that quantum meruit necessitates that Jack be paid for the services he rendered, and as he had proven he did more than half of the contracted job, the judge agrees that the amount billed for the additional labor is fair. Harold’s counterclaim for the return of his down payment is not fair, as it would result in the couple receiving Jack’s services free of charge.

Quantum Meruit vs. Unjust Enrichment

It is not uncommon for people to confuse the principles of quantum meruit and unjust enrichment. Both theories have the goal of preventing one party from taking advantage of another, receiving services without paying their fair value. The difference between the two is that, while unjust enrichment addresses the issue of failure to pay for services rendered, quantum meruit addresses the fair amount that should be paid.

To be successful in a quantum meruit claim, the service provider (plaintiff) must prove that the service recipient (defendant) agreed to the provided services, knowing that the plaintiff expected to be paid, and that the defendant was unjustly enriched, which means he received something for nothing, which was not the agreement. The amount awarded in a quantum meruit case, especially where there is no written contract specifying an amount, is generally based on the fair market value, or going price, for the services rendered.

Change in Cable TV Services and Quantum Meruit Fee Increase

In 1973, the Naranja Lakes Condominium Association entered into a written contract for cable TV services from the predecessor to Americable. The contract was for services at a set rate for 25 years. The contract also recognized that technology and the ability to provide updated service would increase during that time period, and addressed this issue by saying:

“It is further mutually agreed and understood by both parties that from time to time other ancillary cable television services will become available. As these additional services become available they will be offered to the owner at rates to be agreed upon by both parties.”

This clause is vague, as it does not specify how such a mutual agreement would be reached, or what would happen if there was no agreement. During the trial, it was shown that, while Americable approached the condominium association on the subject of improvements, an actual agreement was never reached. When Americable attempted to charge the association for upgraded services, relying on quantum meruit to justify raising rates, the matter ended up in court.

After a trial court ruling, and subsequent appeals to the appellate court and the Florida Supreme Court, it was decided that there was clearly never a meeting of the minds regarding changes in service. The Court ruled that the cable company could not simply imply a new contract where none existed, and that the condominium association could not be held liable for the cable company’s “loose dealings.”

While Americable argued that it should be paid for the physical improvements made at the association, which were done in a manner which could not be “undone,” the fact that it conferred the improvements without an agreement did not entitle the company to compensation or restitution.

Related Legal Terms and Issues

• Civil Lawsuit – A lawsuit brought about in court when one person claims to have suffered a loss due to the actions of another person.
• Defendant – A party against whom a lawsuit has been filed in civil court, or who has been accused of, or charged with, a crime or offense.
• Equitable Remedy – An action ordered by the court for a party to complete his duties under a contract. This is most often used when an award of money damages cannot sufficiently rectify the damages.
• Plaintiff – A person who brings a legal action against another person or entity, such as in a civil lawsuit, or criminal proceedings.