Will a Claim for Quantum Meruit Succeed if a Contract Deals with the Situation?

A claim for quantum meruit will not succeed if there is an existing contract between the parties which deals with the situation.

In S & W Process Engineering Ltd v Cauldron Foods Ltd [2005] EWHC 153 (TCC) HH Judge Peter Coulson QC was required to decide preliminary issues and in doing so provided a summary of the law in relation to claims for quantum meruit.

Coulson J considered that a claim on a quantum meruit cannot arise if there is an existing contract between the parties to pay an agreed sum and referred to The Olanda [1919] 2 KB 728 and Gilbert and Partners v Knight [1968] (CA) 2 ALL ER 248.

In The Olanda Lord Dunedin stated the following which was referred to and applied by the Court of Appeal in Gilbert and Partners v Knight using a theory of justification based on “implied contract”, which no longer applies:

“As regards quantum meruit where there are two parties who are under a contract quantum meruit must be a new contract, and in order to have a new contract you must get rid of the old contract.“

Coulson J referred to the general principle stated by Mason P in Court of Appeal of New South Wales in Trimis v Mina [2000] TCLR 346 in relation to “Restitutionary Quantum Meruit” which recognised that a claim in restitution does not depend on an “implied contract” and cannot be sustained if a contract already governs the situation:

“No action can be brought for restitution while an inconsistent contractual promise subsists between the parties in relation to the subject-matter of the claim. This is not a remnant of the now discarded implied contract theory of restitution. The proposition is not based on the inability to imply a contract, but on the fact that the benefit provided by the plaintiff to the defendant was rendered in the performance of a valid legal duty. Restitution respects the sanctity of the transaction, and the subsisting contractual regime chosen by the parties as the framework for settling disputes. This ensures that the law does not countenance two conflicting sets of legal obligations subsisting concurrently.…… if there is a valid and enforceable agreement governing the Claimant’s right to payment, there is neither occasion nor legal justification for the law to superimpose or impute an obligation or promise to pay a reasonable remuneration“

In Mowlem PLC v Stena Line Ports Limited [2004] EWHC 2206 (TCC) His Honour Judge Richard Seymour QC expressly held that the above statement accurately stated the relevant principle of English Law.

In S & W Process Engineering Ltd v Cauldron Foods Ltd [2005] EWHC 153 (TCC) HH Judge Peter Coulson QC held that S&W could not make a claim for quantum meruit in respect of the items that were incorporated within the original Contract work scope. Prima facie, any item of work within the original Contract work scope would be reimbursable at (in this case) the Target Cost figure unless a potential overspend in respect of that item had been identified and agreed in accordance with the Contract procedure.