Are There Any Rights to Payments for Works Outside of a Contract Under Quantum Meruit?

Are There Any Rights to Payments for Works Outside of a Contract Under Quantum Meruit?

In order to establish an entitlement to payment for work “outside” the contract the necessary ingredients of either a collateral contract or restitution must be present. This may be difficult if the reason for the extra work not falling within the existing contract is the lack of a request for the work to be carried out or agreement to payment for the work.

In Parkinson v Commissioners of Works [1949] the contractor agreed under a varied contract to carry out certain work to be ordered by the Commissioners on a cost-plus profit basis subject to a limitation as to the total amount of profit. The Commissioners ordered work to a total value of £6,600,000 but it was held that on its true construction the varied contract only gave the Commissioners authority to order work to the value of £5,000,000. It was held that the work that had been executed by the contractors included more than was covered, on its true construction, by the variation deed, and that the cost of the uncovenanted addition had therefore to be paid for by a quantum meruit.

In Costain Civil Engineering Ltd v Zanen Dredging & Contracting Co [1997] the instructions purported to be given under the sub-contract did not constitute authorized variations of the subcontract works because the instructions required work to be done outside the scope of the subcontractor’s obligations under the sub-contract. The sub-contractor was therefore entitled to payment on a quantum meruit. In measuring a fair remuneration an allowance was to be made for profit and consideration had to be given to the relationship of the parties and the competitive edge that the subcontractor had by the significant advantage of having already mobilized his equipment.

In S & W Process Engineering Ltd v Cauldron Foods Ltd [2005] HH Judge Peter Coulson QC considered that where there is a contract for specified work but the contractor does work outside the contract at the employer’s request, the contractor may be entitled to be paid a reasonable sum for the work outside the contract: Thorne v London Corp [1876] and Parkinson and Co v Commissioners of Works [1949] He observed that this will always turn on what is meant in any particular instance by “outside the Contract”.

Coulson J held in the particular case before him that prima facie S&W would not be able to make an alternative claim for a quantum meruit in respect of an item of allegedly varied or additional work if they had already failed to demonstrate, under the Contract, that the item of varied or additional work had been instructed and/or requested and/or authorised by Cauldron. If the claim under the Contract for that item of allegedly varied or additional work failed because the necessary instruction or request or authorisation could not be proved, then, at least prima facie, such an omission would also be fatal to any alternative claim for a quantum meruit.

He also held that leaving aside the difficulty created by the existence of the contract itself, S & W’s alternative claim would have to demonstrate that, in some way, Cauldron freely accepted services in circumstances where they should have known that S & W would expect to be paid for them. He considered that might be difficult where the item of extra work in dispute was not clearly requested or instructed or authorised.

Coulson J did however recognise the possibility for a quantum meruit claim in the situation where S&W could show that an increase in the scope of supply had been authorised by Cauldron as a matter of principle (because, for instance, there was a clear minute to that effect), but where the amount of expenditure had never been agreed or expressly authorised by Cauldron. He considered that in those circumstances, it would depend on the facts as to whether a claim was allowable under the Contract, given that a situation where work was done before the expenditure was known or agreed would, prima facie, comprise a breach by S & W of the contract procedure identified. Judge Coulson observed that there may be circumstances in which such a claim might be sustained, although, that would depend each time on the facts and the potential arguments put forward by S&W