Short notes on Quantum Merit of Contract

Quantum Merit means “As much as earned or deserved”, “as much as is merited”. The principle of law provides for payment of compensation under certain circumstances, to a person who has rendered goods or services to another person under a contract which could not or has not been fully performed. The action of Quantum Meruit is allowed in Indian Courts under Section 70 of the Contract Act. The claim of quantum merit arises in the following cases:

1. Breach of Contract:

Where there is a breach of contract, the injured party is entitled to claim reasonable compensation for what he has done under the contract.

2. When a contract is discovered to be void:

When a agreement is discovered to be void or when a contract 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. (Section 65).

3. Where something has been done non-gratuitously:

Where work is done or goods delivered by a person without an intention to do so gratuitously, and the benefit of the same is enjoyed by the other party, the latter is bound to make compensation to the former in respect of, or to restore, the thing so done or so delivered. For example, X forgets certain goods at Y’s house. He had no intention to leave them with him gratuitously. Y uses those goods for his personal benefit. X can compel Y to pay for those goods.

4. Where the contract is divisible:

Where a contract is divisible, and a party to the contract has done a part of his obligation, he may sue on quantum merit. This rule applies even though the party claiming on quantum merit is himself guilty of breach of contract.

Doctrine of ‘quantum merit is, however, subject to the following two limitations:

1. In a contract which is not divisible into parts and a lumpsum of money is promised to be paid for the complete work, part performance will not entitle the party to claim any payment.

2. A person, who himself is guilty of breach of contract, cannot be allowed to claim any payment under the doctrine of quantum merit.

But this rule is subject to following exceptions:

1. If the contract is divisible, part performance will also entitle the defaulting party to claim compensation on the basis of quantum merit if the other party has taken the benefit of what has been done.

2. If a lump sum is to be paid for the compensation of an entire work and the work has been completed in full though badly, the defaulting party can recover the lumpsum less a deduction for bad workmanship.

Hoeing vs Isaacs. In this case, A agreed to decorate B’s flat for a lump sum of Rs. 750. A did the work, but B complained of faulty workmanship. B got the defect removed by paying Rs. 294. Held, A could recover Rs. 750 less 294.

3. Any claim based upon the doctrine of quantum merit cannot be entertained unless there is an evidence of an express or implied promise to pay for the work which has already been done.

4. Where one party to the contract is prevented from performing the contract by the other party or by impossibility or illegality.

Clay vs Yates. In this case, printing of a book had to be abandoned as it contained libelous matter. He was held entitled to recover on quantum merit.

Suit for Specific Performance:

Specific performance means the actual carrying out of the contract as agreed. Under certain circumstances, an aggrieved party may file a suit for specific performance i.e. for a decree by the court directing the defendant to actually perform the promise that he has made. Such a suit may be filed either instead of or in addition to a suit for damages.

Specific performance is a discretionary order which is allowed only in a limited number of cases. Rules regarding the granting of this relief are contained in the specific Relief Act. Under the provisions of this Act, specific performance is granted in the following cases:

1. Where monetary compensation is not an adequate remedy for breach of contract.

2. When there is no standard for ascertaining an actual damage caused by the non-performance.

3. When it is probable that compensation in money on non-performance of the contract cannot be obtained.

But specific performance will not be granted:

(a) To enforce a contract for personal service/personal nature, e.g., a contract to marry, or to paint a picture etc. [Executive Committee of Vaish Degree College, Shamli (U.P) vs. Dr. Laxmi Narayan,

(b) In cases where court cannot supervise performance of contract;

(c) Where damages are adequate remedy;

(d) Contract contains ambiguous terms;

(e) Contract by its nature is revocable;

(f) The contract is made by trustees in breach of their trust;

(g) Contract which can be performed in more than three years;

(h) Where subject matter or major part of such subject matter of contract has unknown to both parties, ceased to exist before contract is made;

(i) If the agreement has been made without consideration;

(j) If it will be inequitable, i.e. not fair and just; for either party;

(k) The contract is made by a company in excess of its powers, as laid down in its Memorandum of Association.

In case of sale of goods, specific performance will only be granted where the goods are specific. It will not be granted as a rule unless the goods are unique and cannot easily be purchased in the market, or are of special value to the party suing for it. In contract for sale of land, rare articles, antiques, etc. courts generally order for specific performance of the contract.

Suit for Injunction :

This is another discretionary remedy granted to secure specific performance of negative terms of the contract. Injunction restrains a person from doing or continuing to do something which amounted to breach of contract. Thus injunction is a mode of securing the specific performance in negative terms.

Illustration :

A agrees to sing at B’s theatre for one year and not to sing elsewhere. During the year A agrees to sing at C’s theatre, thus, refuses to sing at B’s theatre. In this case, contract is of personal nature there fore court cannot order specific performance as it cannot effectively supervise performance but can grant injunction order restraining, A to sing at C’s theatre thus indirectly compelling A to sing at B’s theatre.

Rectification or Cancellation :

When through fraud or a mutual mistake of the parties, a contract or other instrument does not express their real intention, either party may institute a suit to have the instrument rectified. In such a case, if the Court finds that there has been a fraud or mistake, it may ascertain the real intention of the parties, and may in its discretion, rectify the instrument so as to express that intention. But this must not prejudice the rights acquired by third persons in good faith and for value. If rectification is not possible, the Court shall order for the cancellation of the contract.

Illustratio n:

A agreed to hire B’s auditorium at Rs. 800 per day, but while writing the agreement, by mistake, the figure was written as Rs. 8000 per day. The Court can adjudge the document as void or may rectify it. A written document which is void or voidable against a person may cause him in some cases a serious injury, if it is left outstanding. In such a case, if he has any such apprehension, he may file a suit to have the document, adjudged void or voidable. The Court may, in its discretion, adjudge such a document void or voidable and order it to be delivered up and cancelled.