Quantum meruit is a Latin phrase meaning “as much as he has deserved”. In the context of contract law, it means something along the lines of “reasonable value of services”.
The concept of quantum meruit applies to the following situations:
I. When a person employs (impliedly or expressly) another to do work for him, without any agreement as to his compensation, the law implies a promise from the employer to the workman that he will pay him for his services, as much as he may deserve or merit.
II. When there is an express contract for a stipulated amount and mode of compensation for services, the plaintiff cannot abandon the contract and resort to an action for a quantum meruit on an implied assumpsit.
I. The famous example used in United States law schools is usually as follows:
A Man (plaintiff in this hypothetical) talks to a neighbor (defendant) and tells him he’s going to build a wall on their property that will give a benefit to both the man and his neighbor. The neighbor neither agrees nor disagrees with what the man wants to build. The man builds the wall, and then asks the neighbor to compensate him for the benefit of the wall that he conferred on the neighbor (usually half the value of the wall). The neighbor refuses. The man is entitled to some compensation based on quantum meruit. This is because there was an implied promise between the man and the neighbor, which is derived from contract law, because the man was acting under the assumption that the neighbor would pay for part of his services. The plaintiff files suit in court on the basis of quantum meruit. The plaintiff makes an estimation of value conferred on the defendant, which the defendant has not paid. Plaintiff will likely win because of quantum meruit. The winning of the case will be directed as an assumpsit on a quantum meruit.
II. This is not the only factual scenario where this will work. Quantum meruit will also work where there is a breached contract.
A contractor is contracted to work on a school. The contractor does some work but messes up part of the work (breach of contract). The school suspends the construction work because of the problem. The contractor is entitled to be paid for the services he has already done for the school on the basis of quantum meruit.
III. If a plaintiff is prohibited from completing work based on a long term service contract where other contacts have been negotiated, the plaintiff may ask a court to determine a judgment based on the amounts that the defendant benefited. Third parties may also bring actions against the plaintiff.
A Promoter enters into a long term service contract with a Theatre to exclusively present events for a specified period. The promoter books events and contracts with others to perform during the entire period but alleges that the theatre is unsafe. The Promoter withholds payments until the theatre is made safe. The Theatre performs no repairs. Instead the Theatre terminates the entire service contract before the benefit of the events occurs to the plaintiff and refuses to repair the theatre. After the contract is terminated, the theatre operates the events negotiated by the promoter and gains a significant benefit but does not pay the promoter anything. The theatre also cancels some events without cause. A court determines that the promoter is entitled to an assumpsit on a quantum meruit.