In Mann v Paterson Constructions Pty Ltd  HCA 32 the High Court clarified the availability of the restitutionary remedy of ’quantum meruit’ to a builder in the specific circumstances where the builder terminates the contract following repudiatory behaviour of a homeowner. A literal translation of ‘quantum meruit’ is ’the amount he deserves’. It can be used to restore the value of the goods and services supplied by a builder which otherwise may be unfairly gained by a home owner.
It had long been established that a builder, when terminating a contract for the owner’s breach or accepting the owner’s repudiatory conduct, could elect to claim his loss either as damages for breach of contract or as quantum meruit. In practice, a builder may have elected to claim on quantum meruit because he had underpriced the job and his loss of profits, as part of his damages, was minimal.
A practical result of the election opportunity was that the contract did not act as a ceiling on the builder’s recovery and allowed him to be placed in a more favourable position than he could have achieved under the contract. The High Court has now held that a builder can claim on a quantum meruit but only where he had no accrued contractual right to payment. Where there was a contract in place the builder was limited to claiming his contractual entitlements
Are you having problems with quantum meruit contracts?
Clare Peacock is an experienced construction lawyer working on Sydney’s Northern Beaches. Clare provides practical, cost-effective building approval advice to property owners, builders and strata managers. Services include residential building disputes, body corporate issues and strata building problems.