Quantum merit
Reasonable payment for work done or goods supplied: sections 65 and 70 of the Indian Contract Act, 1872
In one minute
Quantum meruit is Latin for "as much as he has earned". It is a claim for a reasonable price for work done or goods supplied, when no contract price binds the parties. The contract may be void, the price may never have been fixed, or the other side may have stopped the work.
The claim is for the value of what was given. It is not a claim for profit, and it is not a claim for damages. In exams, the grounds, the limit (no claim where a valid contract fixes the price) and Alopi Parshad earn the marks. In real life, it pays freelancers, builders and professionals whose paperwork failed.
Exam focus
- Frequency: Occasionally asked
- Usually asked as: Short answer (4 to 6 marks)
Legal provision
The Act has no section called "quantum meruit". The claim rests on sections 65 and 70 and on the law of implied contract.
- Section 65: when an agreement is discovered to be void, or a contract becomes void, a person who has received any advantage under it must restore it, or make compensation for it, to the person from whom he received it.
- Section 65, illustration (b): A contracts to deliver 250 maunds of rice before 1 May. A delivers 130 maunds only, and none after. B keeps the 130 maunds after 1 May. He is bound to pay A for them.
- Section 70: where a person lawfully does anything for another, not intending to do it gratuitously, and the other enjoys the benefit, the other must pay compensation or restore the thing.
- Section 73, third paragraph: when an obligation resembling those created by contract has been incurred and not discharged, the injured person gets the same compensation as if he had contracted for it and the contract had been broken.
Meaning and definition
The maxim quantum meruit means "as much as he has earned". The Supreme Court described it in Alopi Parshad and Sons Ltd. v. Union of India (1960). It said: "Compensation quantum meruit is awarded for work done or services rendered, when the price thereof is not fixed by a contract". It added that quantum meruit is reasonable compensation based on an implied contract to pay.
The reason for the rule is unjust enrichment. If a person has taken the benefit of another's work or goods, he should pay a fair price for it. The law fixes that price by the value of the work, not by any promise.
The decision tree shows when the claim lies.
- 1. Did the claimant do work or supply goods expecting to be paid, for the other person's benefit? section 70No: there is no claim.
- 2. Is there no valid contract that fixes the price for this work?No, a valid contract fixes the price: the claim lies under the contract and not as quantum meruit.
- 3. Is the reason one of these: the contract is void, no price was fixed, the other party stopped the work, or a part was accepted?No: there is no basis for the claim.
- 4. Did the other person accept and enjoy the work or goods, or prevent the work from being finished?No, the claimant walked away from an entire contract: there is no claim.
- All answers favour the claimant: he recovers a reasonable price for the work done or goods supplied.
Detailed explanation
Step 1: the claim is for value, not for profit
The measure is the reasonable value of what was done or supplied. It is not the profit the claimant hoped to make, and it is not the contract price. The court fixes a fair figure by market rates, time spent and the nature of the work.
Step 2: ground one, the agreement is void or invalid
Where an agreement turns out to be void, section 65 requires the receiver of an advantage to restore it or pay for it. Where a contract is invalid for want of form, section 70 gives compensation. In State of West Bengal v. B.K. Mondal & Sons, a State had to pay for sheds and rooms built at its officers' request, although the contracts did not follow the form required by law.
In Craven-Ellis v. Canons Ltd. (1936), the persons who made the agreement had no authority to bind the company, so the agreement was void. The Court of Appeal allowed the managing director to recover a reasonable sum for the services he had in fact rendered.
Example. Sai Constructions builds a boundary wall for a Government school on an official's oral request. The contract is invalid for want of the prescribed form. The school uses the wall for two years. Sai Constructions recovers a reasonable price for the wall.
Step 3: ground two, no price was fixed
Where parties never fixed a price, the law reads in a promise to pay a reasonable sum. The Supreme Court's words in Alopi Parshad apply. Quantum meruit is awarded when the price is not fixed by a contract.
Example. Ananya asks Ramesh, a freelance programmer, to build an app for her business. They never agree a fee. Ramesh finishes the app, and Ananya launches it. Ramesh may recover a reasonable fee for the work.
Step 4: ground three, the other party stops the work
If one party prevents the other from finishing, or repudiates the contract halfway, the innocent party may choose to claim for the work done instead of damages. In the English case Planché v. Colburn (1831), an author had written a large part of a book when the publisher abandoned the project. The author recovered a reasonable sum for the work he had done.
Step 5: ground four, part performance is accepted
If a contract is entire and one party abandons it halfway, he cannot recover for the part he did. In Sumpter v. Hedges (1898), a builder gave up a contract to build two houses for a lump sum of £560 after doing work worth £333. He could not recover on the contract. The owner had not done anything from which a new promise to pay could be inferred.
Indian law reaches a fair result through section 65, illustration (b), and section 70. A party who voluntarily keeps the part delivered must pay for it. The Act's illustration of 130 maunds of rice shows the rule.
Step 6: the limit, a valid contract that fixes the price
If a valid contract fixes the price, the claimant is held to it. In Alopi Parshad, agents supplied ghee under a contract, and an arbitral award gave them a quantum meruit sum. The Supreme Court set the award aside. It said that an express stipulation "cannot be displaced by assuming that the stipulation is not reasonable".
Later cases say the same. In Mulamchand v. State of M.P. (1968) the Court said that a section 70 claim arises because there is no contract. In Mahanagar Telephone Nigam Ltd. v. Tata Communications Ltd. (2019) it noted that each section of the chapter assumes no contract, and held that a dispute under a purchase order was governed by section 74 and the contract cap.
When quantum meruit is available
| Situation | Quantum meruit? | Authority |
|---|---|---|
| Agreement void or contract invalid for want of form | Yes | Section 65; section 70; State of West Bengal v. B.K. Mondal |
| No price ever fixed, work accepted | Yes | Alopi Parshad (price not fixed by a contract) |
| Other party stops or repudiates the work | Yes, as an alternative to damages | Planché v. Colburn |
| Part performance voluntarily accepted | Yes, for the part accepted | Section 65, illustration (b) |
| Valid contract fixes the price | No | Alopi Parshad; Mahanagar Telephone Nigam Ltd. v. Tata Communications Ltd. |
| Claimant abandons an entire contract | No | Sumpter v. Hedges |
Don't confuse: quantum meruit, damages and the contract price
All three put a rupee figure on a claim. They answer different questions.
| Point | Contract price | Damages for breach | Quantum meruit |
|---|---|---|---|
| Basis | The promise to pay a fixed sum | Loss caused by breach (section 73) | Value of the benefit given |
| Contract needed | Yes, valid | Yes, broken | No valid contract fixing the price |
| Includes lost profit | Yes, built into the price | May include, if not remote | No |
| Together for the same work | Not with quantum meruit | Not with quantum meruit | Not with damages |
Inside the idea. A caterer cooks for a wedding on an oral booking with no price discussed. The family accepts and eats the food. The caterer claims a reasonable charge.
Just outside it. A carpenter agrees in writing to make furniture for Rs 80,000. The buyer thinks the work is worth less. The carpenter must claim the agreed Rs 80,000, and the buyer cannot reduce it by pleading that the price is too high.
Common mistakes
- Claiming quantum meruit where a valid contract fixes the price. The contract rate governs.
- Thinking that the claim is for lost profit. It is for the value of what was given.
- Claiming quantum meruit for the same work for which damages are also claimed.
- Forgetting that a party who abandons an entire contract halfway cannot claim for the part he did.
Apply it
Problem
Kavya, an interior designer, agrees orally with Arun to redesign his five-room office. No fee is fixed. She completes three rooms to a high standard, and Arun uses them at once. He then ends the engagement without cause, before the other two rooms are touched. Arun refuses to pay anything. What can Kavya claim, and on what basis?
Issue. Can Kavya claim payment for the work done, although no price was fixed and the contract was not completed?
Rule. Quantum meruit is awarded for work done when the price is not fixed by a contract (Alopi Parshad). A person who lawfully does something for another, not meaning it as a gift, and the other enjoys the benefit, is paid compensation (section 70). A party who prevents the work from being finished cannot refuse to pay for what was done.
Application. No valid contract fixes a price, so the contract does not exclude the claim. Kavya expected payment, and Arun accepted and used three rooms. Arun ended the engagement without cause, so Kavya did not abandon it.
Conclusion. Kavya can claim a reasonable fee for the three rooms. She cannot claim for the two rooms she did not do. If she claims quantum meruit, she cannot also claim damages for the same work.
Leading case laws
- Alopi Parshad and Sons Ltd. v. Union of India (1960)
Facts. Agents supplied ghee to the Government under a contract, and an arbitration award gave them a quantum meruit sum. The Supreme Court set the award aside. (1960) 2 SCR 793.
Principle. Quantum meruit is awarded where the price is not fixed by a contract. It cannot replace the price that a valid contract fixed.
Why it matters. It is the leading Indian case on the limit of quantum meruit.
- Craven-Ellis v. Canons Ltd. (1936)
Facts. A managing director performed services under an agreement that was void, because those who made it had no authority to bind the company. He sued for payment. [1936] 2 KB 403.
Principle. Greer L.J. said that the obligation to pay reasonable remuneration is "imposed by a rule of law, and not by an inference of fact".
Why it matters. It shows that quantum meruit does not need a valid contract.
- Planché v. Colburn (1831)
Facts. An author had written a large part of a book for £100 when the publisher abandoned the project. The author sued. (1831) 8 Bing 14.
Principle. He recovered a reasonable sum for the work done, because the other side had prevented completion.
Why it matters. It supports quantum meruit when the other party stops the work.
- Sumpter v. Hedges (1898)
Facts. A builder agreed to build two houses and stables for £560. He did work worth £333 and then abandoned the contract. [1898] 1 QB 673.
Principle. He could not recover on the contract, and he could not claim quantum meruit unless the owner did something from which a new promise to pay could be inferred.
Why it matters. It marks the limit for a party who abandons an entire contract.
- State of West Bengal v. B.K. Mondal & Sons (1962)
Facts. A contractor built storage sheds and rooms for a State department at officers' request. The contracts did not meet the form required by section 175(3) of the Government of India Act, 1935. AIR 1962 SC 779.
Principle. The State had to pay compensation under section 70 for work it accepted and used.
Why it matters. It applies the reasonable-payment idea to a Government contract.
How to write this answer in the exam
5-mark answer
- Give the meaning: "as much as he has earned", a reasonable price for work done.
- List the grounds: void agreement, no price fixed, other party stops the work, part performance accepted.
- State the limit: no claim where a valid contract fixes the price.
- Name Alopi Parshad.
10-mark answer
- Meaning, with the basis in unjust enrichment and sections 65 and 70.
- Each ground with an example and a case.
- The measure: reasonable value, not profit and not damages.
- The limit: Alopi Parshad and Mahanagar Telephone Nigam Ltd.
- Quantum meruit compared with damages and the contract price.
- A short problem applying the rules.
Key points to remember
- Quantum meruit means "as much as he has earned": a reasonable price for work done or goods supplied.
- It is available where a contract is void, no price was fixed, the other party stopped the work, or part performance was accepted.
- It is not available where a valid contract fixes the price.
- It measures the value of the benefit, not profit and not damages.
- A party who abandons an entire contract halfway cannot claim for the part done.
- The claimant cannot have both quantum meruit and damages for the same work.
Quick self-test
1. What does quantum meruit mean?
It means "as much as he has earned". It is a claim for a reasonable price for work done or goods supplied.
2. Can an agent claim quantum meruit when a valid contract fixes his remuneration?
No. The express contract rate governs (Alopi Parshad).
3. Give one ground on which quantum meruit is available.
Any one of: the agreement is void, no price was fixed, the other party stopped the work, or the other party accepted part performance.