What is meant by 'Quantum Meruit'? Give an example.

Exercises · Q7

Q. What is meant by 'Quantum Meruit'? Give an example.

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Quantum Meruit literally means "as much as is earned" or "as much as is merited." It allows a party who has already performed part of a contract, and is then prevented from completing the rest by the other party's own breach, to recover reasonable compensation for the work actually done or goods actually supplied so far — even though the contract itself may never have provided for part-payment in such a case.

Example: A agrees to build a house for B for a lump-sum contract price. After A has built half the house, B wrongfully prevents A from continuing (say, by denying access to the site without justification). A cannot sue for the full lump-sum price, since the house was never completed, but A can claim, on a quantum meruit basis, reasonable payment for the value of the work actually done on the half-built house. …

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Same / Similar Concept — real previous-year questions on the same or a closely similar concept, not this exact question.

CA Foundation 2022Set may-202212 marks
$Q. (a) Sheena was a classical dancer. She entered into an agreement with Shital Vidya Mandir for 60 dance performances. As per the contract, she was supposed to perform every weekend and she will be paid ₹10,000/- per performance. However, after a month, she was absent without informing, due to her personal reasons. Answer the following questions as per the Indian Contract Act, 1872.$
(i) Whether the management of Shital Vidya Mandir has right to terminate the contract?
(ii) If the management of Shital Vidya Mandir informed Sheena about its continuance, can the management still rescind the contract after a month on this ground subsequently?
(iii) Can the Shital Vidya Mandir claim damages that it has suffered because of this breach in any of the above cases? (4 Marks)
(b) The Articles of Association of Aarna Limited empowers its managing agents to borrow loans on behalf of the company. Ms. Anika, the director of the company, borrowed ₹18 Lakhs in name of the company from Quick Finance Limited, a non-banking finance company. Later on, Aarna Limited refused to repay the money borrowed on the pretext that no resolution authorizing such loan have been actually passed by the company and therefore the company is not liable to pay such loan. Decide whether the contention of Aarna Limited is correct in accordance with the provisions of the Companies Act, 2013? (4 Marks)
(c) What are the consequences of destruction of specified goods, before making of contract and after the agreement to sell under the Sale of Goods Act, 1930. (4 Marks)
›Reveal solutionSolution

(a) Sheena's unexplained absence is a refusal/failure to perform, so under Sec 39, Indian Contract Act 1872 the school may put an end to the contract; if it instead signifies its wish to continue, it waives rescission for that breach but may still claim damages (Sec 75/73). (b) The doctrine of indoor management (Turquand's rule) protects the outsider lender, so Aarna Ltd is liable. (c) Under the Sale of Goods Act 1930, perishing of specified goods before the contract makes it void (Sec 7); perishing after an agreement to sell but before risk passes avoids the agreement (Sec 8).

Part (a) — Refusal to perform: right to terminate, waiver and damages

Issue. Sheena agreed to give 60 weekend performances at ₹10,000 each but, after a month, stayed away without informing anyone. Three questions arise on termination, waiver and damages.

Rule. Under Section 39 of the Indian Contract Act, 1872, when a party to a contract has refused to perform, or disabled herself from performing, her promise in its entirety, the promisee may put an end to the contract, unless he has signified, by words or conduct, his acquiescence in its continuance. Even where the contract is continued or is rightfully rescinded, the party in default remains liable in damages: a person who rightly rescinds is entitled to compensation for any damage sustained through the non-fulfilment of the contract (Section 75), and compensation for loss caused by breach is governed by Section 73. …
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Q.What is meant by 'Quantum Meruit'? Give an example.

Concept understanding — Remedies for Breach of Contract — Rescission and Damages (Indian Contract Act, 1872)

Rescission (Section 39 / 64–65)

Damages (Sections 73 & 75)

Part (a) — Refusal to perform: right to terminate, waiver and damages

Q.What is meant by 'Quantum Meruit'? Give an example.

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