A

Project Report on
Quantum Merit V/s Injustice Reachment
Submitted To: Mr.Vishal Dixit (Contract Law-I )
Roll no: 97
Semester-II
(B.A.L.L.B. Hons.)
Submitted By: Naveen kumar Sihare

Date of Submission: 31/10/2018

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 CONTENTS
1. Acknowldgement
2. Introduction
3. BREACH OF CONTRACT
4. REMEDIES FOR BREACH OF CONTRACT
5. QUANTUM MERUIT
6. Conclusion
7. Bibliography

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 ACKNOWLEDGEMENT

A jug fills drop by drop…that is what Lord Buddha said years ago, without those drops the jug would be
useless and it is a moral obligation upon me to acknowledge all those drops which helped me to prepare
the project. Right from my teacher Vishal Sir who taught us the importance of law in our life with similar
perseverance as a gardener does in nurturing the tender flowers of his garden,.to the various books and
case books found in amass in the library certainly proved to be of great help akin to a north star for my
journey.

I would also like to thank Larry page and Bill Gates for developing such wonderful software as Google
and Microsoft word respectively. The former being a terrific search engine which carried the whole
project efficiently and exposed me to innumerable sites regarding the legal diamensions of the project
topic. The latter being a type writer with its own brains which has everything from the spellchecks ,to font
styles to the clip art without which the whole project would have remained in it’s foetal stage.I would also
like to thank my fabulous friends for not bothering me the least while the project was being mooted out.

Lastly I would like to thank my parents and the luminous silhouette which tends to guide and look after
me not just in the project but also in my life despite my dearth of affection and sincerity towards them.

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 1.INTRODUCTION

Quantum meruit is a Latin phrase meaning "what one has earned". In the context of contract law, it means
something along the lines of "reasonable value of services".

This is a subtopic under the heading ‘Remedies for Breach of Contract’.

According to s. 2(h) of the Indian Contract Act 1872, an agreement enforceable by law is called contract.

Section 10 of the Indian Contract Act 1872 define the essentials of a contract

S.10 of the Indian Contract Act states - What agreements are contracts.- All agreements are contracts if
they are made by the free consent of parties competent to contract, for a lawful consideration and with a
lawful object, and are not hereby expressly declared to be void.

Contract law is based on number of Latin legal principles, out of which ‘consensus ad idem’ is the most
important, which means a meeting of the minds between the parties i.e. an agreement among them. It is
said to be part of private law because it does not bind the state or person that are not parties to the contract.
Consequently, the contracts are voluntarily and require an “exercise of the will of the parties”.

A contract an agreement between two or more persons, creating an obligation upon them to fulfil or not to
fulfil some duties laid down specifically in the agreement. The agreement creates a legal relationship of
rights and duties on the parties and if these obligations in the agreement are not fulfilled, then action could
be taken against the defaulting party in the court of law.1

Breach of contract is mentioned in the Indian Contract 1872 in section 2, 22 and the remedies available are
mention in section 73, 74, and 75 of the Indian Contract Act, 1872.

Quantum meruit is the measure of damages where an express contract is mutually modified by the implied
agreement of the parties, or not completed. While there is often confusion between the concept of
quantum meruit and that of "unjust enrichment" of one party at the expense of another, the two concepts
are distinct.

1
‘ Remedies against Breach of Contract’ available at http://www.hg.org/article.asp?id=20711

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A claim in quantum meruit is usually an action to recover the reasonable value of services rendered by one
party to another2.

It is a equitable doctrine. The doctrine of quantum meruit is one part of the law of restitution, more
commonly known as the law of unjust enrichment. In the law of unjust enrichment, there are two distinct,
but related, remedies. This arises in cases of quasi-contract and contracts where the price has not been
negotiated beforehand. The element that is central to the recovery of damages through the doctrine of
Quantum Meruit is how much amount is reasonable. Also in these cases, the facts of the case are often
very important in determining the extent of damages sustained and might be a reasonable sum to recover.

2
‘Quantum Meruit’ available at http://www.law.cornell.edu/wex/quantum_meruit

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AIMS AND OBJECTIVES

The researcher aims to get abetter understanding of the doctrine of quantum meruit in the context of the
Indian Contract Act, 1872 through this research.

RESEARCH METHODOLOGY

The researcher has primarily used doctrinal method to research owing to the nature of the topic. Journals,
Books and online materials have been extensively used in the completion of this project.

2.BREACH OF CONTRACT

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A Breach of Contract occurs when a party thereto renounces his liability under it, or by his own act makes
it impossible that he should perform his obligations under it or totally or partially fails to perform such
obligations. A Breach of contract can be Anticipatory or Present.

Breach of Contract leads to the infringement of the rights of the non-breaching party. Hence, his rights are
needed to be restored. For this various remedies are available to the aggrieved party. Remedies available
under Common Law are Damages. The main purpose of Damages is to enable the innocent party to
receive Monetary Compensation. Damages are awarded as of right. They are calculated on the basis of
looking at what the position of the plaintiff would have been if the Contract had been properly performed.
Monetary Damages can be Compensatory, Consequential, Nominal or Liquidated. 

There is another group of remedies available to the aggrieved party which are known as Equitable
Remedies. These are discretionary remedies at Equity and are only granted where damages are not an
adequate remedy. Equitable Remedies include Rescission, Restitution, Specific Performance, Injunction,
Quantum Meruit, Anton Piller Order,etc.3

If the breaching party refuses to pay the Court ordered judgement, the court may issue Writ of Attachment
or Writ of Garnishment to enforce the remedies.

Section 73, 74 and 75 of the Indian Contract Act, 1872 deals with remedies and damages for Breach of
Contract.

A contract, being a fountainhead of a correlative set of rights and obligations for the parties, would have
no value if there were no remedies to enforce the rights thereunder.

The party committing the breach of contract is called the ‘guilty party’ and the other party or the victim is
known as ‘injured party’ or ‘aggrieved party’.

3.REMEDIES FOR BREACH OF CONTRACT

3
‘Remedies for Breach of Contract’ available at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2042652

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When one of the parties makes a breach of contract, the following remedies4 are available to it under the
Indian Contract Act, 1872 :-

 Damages

Remedy by way of damages is the most common remedy available to the injured party. This entitles the
injured party to recover compensation for his loss suffered by him due to the breach of contract, from the
party which causes the breach. Sections 73 to 75 incorporate the provisions in this regard. The major
remedy available at common law for breach of contract is an award of damages. This is a monetary sum
fixed by the court to compensate the injured party.

In order to recover substantial damages the innocent party must show that he has suffered actual loss; if
there is no actual loss he will only be entitled to nominal damages in recognition of the fact that he has a
valid cause of action.

 Quantum Meruit

When the injured party has performed a part of his obligation under the contract before the breach of
contract has occurred, he is entitled to recover the value of what he has done under this remedy. But
Quantum Meruit is still an alternative to, rather than a form of damages. It may be noted that this remedy
is available only for the part of the work done by the party other than the one making a breach of contract.
If the party making breach of the contract has done a part of the work in connection with it, he cannot
claim anything in respect thereof under this remedy

 Specific performance and Injunction

Sometimes a party to the contract instead of recovering damages for the breach of contract may have to
recourse to the alternative remedy of specific performance of the contract, or an injunction restraining the
other party from making a breach of the contract. Provisions regarding these remedies are contained in the
Specific Relief Act, 1963

4.QUANTUM MERUIT

4
‘Remedies For Breach of Contract’, p.346, R.K. Bangya, Contract-I by Allahabad Law Agency

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Anson has defined the term Quantum Meruit in the following words:5

“If the injured party, the breach occurs, has already done, part though not all, of what he was bound to do
under the contract, he may be entitled to claim the value of what he has done. In that case he has to sue
upon a Quantum Meruit.,” He, however adds, “Quantum Meruit” is still a remedy which is alternative to
rather than a form of damages.”

In the words of Alderson, B:6

Where one party has absolutely refuse d to perform, or has rendered himself incapable of performing his
part of the contract, he puts it in the power of the other party either to sue for breach of it or to rescind the
contract and sue on quantum meruit for the work actually done.

It may be noted that this remedy is available only for the part of the work done by the party other than the
one making a breach of contract. If the party making a breach of contract has done a part of the work in
connection with it, he cannot claim anything in respect thereof under this remedy.

Quantum meruit may be available only when the following conditions are fulfilled:

It is available only if “the original contract has been discharged.”

The claim must be brought by the party not in default.

In Puran Lal Shah vs. The State of U.P7., the Supreme Court of India reaffirmed the above principles. The
Supreme Court observed:

“The principle of quantum meruit is rooted in English law under which there were certain procedural
advantages in framing an action for compensation of work done. In order to avail of the remedy under
quantum meruit, the original contract must have been discharged by the defendant in such a way as to
entitle the plaintiff to regard himself as discharged from any further performance and he must’ve elected
to do so. The remedy, it may be noted is, however, not available. To the party who breaks the contract
even though he may have partially performed part of the obligation. The remedy by way of quantum
meruit is restitutory that is a recompense for the value of the work done by the plaintif in order to restore

5
P. 505, Beatson, Jack; Burrows, Andrew; Cartwright, John, Anson’s law of Contract 29th ed. , Oxford University Press

6
Hadley v Baxendale [1854] EWHC J70
7
AIR 1971, SC 712

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him to the position to which he would’ve been if the contract had never been entered into. In this regard it
is different to a claim for damages which is compensatory remedy aimed at placing the injured party ,as
near as may be in the position he would have been in, had the other party performed the contract.”

In this case, the plaintiff ah submitted a tender for the construction of 3 miles of National Bhowali road at
13% below the rates mentioned in a certain schedule issued by the government of United Proviences on
13th Sptember 1943. His tender was accepted. Later on he claimed higher rates on account of certain
reasons such that hard slab of rock coming in the way, and non-fulfilment of the condition that stone
would be available at a particular distance.

The High Court had disallowed the claim of the appellant for higher rates for being in fact by way of
damages. The appellants, therefore filed an appeal in the Supreme Court . The Supreme Court quoted with
approval the principle enunciated by it in an earlier case namely Alopi Prasad and Sons Ltd. vs. The
Union of India8 which was as follows:

“Compensation quantum meruit is awarded for work done or services rendered when the price thereof is
not fixed by a contract. For work done or services rendered pursuant to the contract compensation
quantum meruit cannot be awarded where the contract provides for contract provides for consideration
payable in that behalf.”

Referring to the above case, the Supreme Court said, “though in that case the basis of that principle was
not explained, it nevertheless lays down that where work is done under a contract pursuant to the terms
thereof no amount can be claimed by way of quantum meruit thereof. 9

Ordinarily, if a person, having agreed to do some work or render some services, has done only a part of
what he was required to do, he cannot claim anything for what he has done. When a person agrees to
complete some work for a lump sum, non-completion of the work does not entitle him to any
remuneration even for the part of the work done. But the law recognises an important exception to this
rule by the way of an action for quantum meruit.

Under this action, if A and B have entered into a contract, and A, who has already performed a part of the
contract is then prevented by B from performing the rest of his obligation under the contract, A can
recover from B reasonable remuneration for whatever he has already done.
8
AIR 1960 SC 588
9
Puran Lal Shah vs. The State of U.P. AIR 1971 SC 712 at p. 716

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It may be noted that this action is not an action for compensation for the breach of contract by the other
side. It is an action which is alternative to the breach of contract. This action in essence is one of
restitution, putting the party injured by the breach of contract in a position in which he would have been,
had the contract not been entered into. It merely entitles the injured party to be compensated for whatever
works he may have already have done, or whatever expense he may have incurred. This is an example of
Quantum Meruit.

The remedy by way of quantum meruit is not a contractual remedy although in some cases the remedy is
available on the breach of contract by a party to it. The real nature of the remedy is quasi-contractual. The
remedy has, therefore been held available when the work has been done by the plaintiff under a void
agreement.

In Cravan-Ellis vs. Cannon Ltd., the plaintiff was appointed the managing director of a company and he
was to be paid certain remuneration for his services. The agreement his appointment was void because
contrary to the Articles of Association, he and the other directors, who had appointed him, had failed to
take the qualification shares within the prescribed time limit. The plaintiff however, continued to render
services to the company. It was held that though the contract was void and the plaintiff could not claim
anything on that basis, he was still entitled to recover for the services rendered by him on his claim of
quantum meruit.

Greer, L. J. observed:

The obligation to pay reasonable remuneration for the work done when there is no binding contract
between the parties is imposed by the rule of law, and not by the inference of facts arising from the
acceptance of services or goods. It is one of the cases. It is one of the cases referred to in books on
contracts as obligations arising quasi ex contractu.

A similar case in India was that of the Associated Cement Co. Ltd. Vs Union Of India10.

In Associated Cement Co. Ltd. Vs Union of India, the railways authorities charged excess freight from the
appellant on the supposition that cement from one of the appellant’s factories is to be carried by a longer
route. The good were, in fact, carried by a shorter route. The excess fare charged was because of a mistake
and, therefore the contract was void ab initio.

10
AIR Pat 212 at p. 219

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It was held that the appellants could claim he excess amount paid by them and the respondent, i.e. , the
Railway authorities could retain the freight for carrying the goods to actual distance on the basis of
application of the doctrine of quantum meruit.

In M/s Patel Engineering Co. Ltd. Vs. Indian Oil Corporation Ltd. , it was held that “Quantum Meruit is
based on a quasi-contract and arises in a sense on an implied contract and not on any expense
agreement ...... where a party to a contract has wholly or partially performed his obligation he may
neglect the contract and sue upon the doctrine of quantum meruit. But while this contract has not been
neglected or repudiated and a claim is based upon the terms of the contract, the principle of quantum
meruit cannot be invoked. 11

The study guide states that unjust enrichment is not available if a valid and subsisting contract
governs the relationship between the parties. Does the decision of the High Court in Lumbers v W
Cook Builders Pty Ltd [2008] HCA 27 support this statement?

The statement at hand, simply communicates that if a contract does not exist between parties, and a benefit
is gained, then the party who has suffered detriment due to this gain may claim restitution. Many plaintiffs
before have been successful in claiming such compensation according to this policy, and their cases have
been almost identical to that of Builder’s, but Builder’s case was not successful, which is why the
statement does not support this specific case. The case was peculiar in that it included a third party who
was not included in the dispute, which made it an exception to the rule and unjust enrichment or an
estoppel could not be applied.

The legal component of equity acts as ‘a mechanism to soften the sometimes harsh effects of the law’. 12 It
is remedial in nature in that it performs a sort of in personam “balancing act” between the parties in
dispute. The remedies of restitution offered by equity are available if a contract does not exist between the
parties. That is to say, ‘the quasi-contractual obligation to pay for and just compensation for a benefit,
which has been accepted will only arise where there is no applicable genuine agreement or where such
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agreement is frustrated, avoided or unenforceable’. Therefore it is necessary to establish if a contract
was in action, and if so with which parties did the contract or contracts exist.

11
AIR Pat 212 at p. 360
12
Bernadette Mulholland, Tutorial notes (2010).
13
Trischa Mann, Oxford Australian Law Dictionary (2010), 220.

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An oral agreement constituting a contract was allegedly made between Lumbers and Sons. ‘In determining
whether parties have made a contract courts are often guided by an assessment of whether the parties have
engaged in a process of offer and acceptance...Mutual assent constituting an agreement might be inferred
from an objective assessment of parties’ conduct’. 14 It was evident that Lumbers made an offer to Mr
David McAdam, who acted as an agent for Sons and accepted the Lumber’s offer to build a house in
exchange for monetary payment. There was also consideration, signified in the exchange of goods and
there was clear intent in both parties to fulfil their promises; depicted in their conduct, for instance
Lumber’s lump sum payments and Sons use of the Lumber’s architectural plans. Sons also came to an oral
agreement with Builders, as the trial judge held, ‘The “arrangements”, said by Builders to have resulted in
a contract, involved a proposal made by Mr McAdam on behalf of Sons which was accepted by Mr Jeffery
Cook on behalf of Builders’.15

Although the two contracts were legally in place, there was never a contractual relationship established
between Lumbers and Builders. As the justices held, ‘[Builders] did not seek to prove that the Lumbers
had ever asked Builders to do whatever Builders did in connection with the Lumber’s house. And the
evidence that was led at trial showed that the Lumbers had never asked Builders to do anything in
connection with the Lumber’s house’.16 Without offer and acceptance, a contract could not exist between
the two parties and Builder’s did not have the legal right to directly claim against the Lumbers as they may
have thought. As supported in Toll v Alphapharm,17 ‘It is not the subjective beliefs or understandings of
the parties about their rights and liabilities that govern their contractual relations. What matters is what
each party by words and conduct would have led a reasonable person in the position of the other party to
believe.’ However, Builders did submit in their Statement of Claim that they substituted the place of Sons
in the contract between Sons and Lumbers when the reorganisation of the Cook Company occurred.
Allegedly, the building obligations within the contract as well as the right to claim directly against the
Lumbers were rightfully assigned to them after the division of the Cook company. This may have been
plausible if the appellant had not acted unconscionably, seeing that at the time of reorganisation ‘[Mr
Cook] did not speak to Mr McAdam, Warwick Lumbers or [the architect] about the terms of the contract
which he and his immediate family were apparently taking over in Builders’. 18 The judge also held that,

14
Geoff Lindsay, Contract (5th ed, 2004), 22.
15
Lumbers v W Cook Builders Pty Ltd (2008) HCA 27; 274 ALR 412, 419.
16
Lumbers v W Cook Builders Pty Ltd (2008) HCA 27; 274 ALR 412, .
17
Toll v Alphapharm (2004) 52 HCA 129, 136.
18
Lumbers v W Cook Builders Pty Ltd (2008) HCA 27; 274 ALR 412, 420.

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‘Jeffery Cook did not request the Lumbers to make payments direct to Builders rather than Sons...It was
only well after the liquidation that anyone put the Lumbers on notice that any sum was outstanding, and
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suggested a direct claim as an equitable assignee’. As Builders acted without conscientiousness, Son’s
contractual position could not be assigned to them. Vanstone J also noted that the contract between Sons
and Lumbers was of a personal nature and incapable of assignment.20

As there was no contract between Lumber s and Builders and no grounds for equitable assignment, it
would appear there are proper grounds for remuneration to be recovered through unjust enrichment. After
all, the three elements of unjust enrichment 21 appeared to be satisfied in that the defendant had received a
benefit, the benefit was received at the plaintiff’s expense and it would be unconscionable for the
22
defendant to retain the benefit. A similar circumstance arose in Steele v Tardiani, when restitution was
recovered to the plaintiff through the means of a quantum meruit as the defendant had benefitted from an
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unpaid part of the plaintiff’s work and labour. And again in Pavey v Matthews, the court granted
remuneration to the plaintiff through a quantum meruit claim and ruled, ‘There is no apparent reason in
justice why a builder who is precluded from enforcing an agreement should also be deprived of the
ordinary common law right to bring proceedings on a common indebitatus count to recover fair and
reasonable remuneration for work which he has actually done...’ Builders also claimed that, ‘the Lumbers,
by moving in and occupying the house, accepted the benefit’, which entitled them to remuneration as in
Hoeing v Isaacs,24 where it occurred that the plaintiff could recover the entire balance owing to him after
the defendant had accepted the work provided. However, Builders never received a quantum meruit
remedy from the Lumbers. This is why the case does not support the statement at hand. There was not a
valid and subsisting contract governing the relationship between Lumbers and Builders, therefore the
quasi-contractual obligation to provide restitution for a benefit should apply, but as we know it did not.
The court could not establish unjust enrichment in this case in that Lumbers were not unjustly enriched or
did not obtain a “windfall”.

The court held:

19
Lumbers v W Cook Builders Pty Ltd (2008) HCA 27; 274 ALR 412, 420.
20
Lumbers v W Cook Builders Pty Ltd (2008) HCA 27; 274 ALR 412, 421.
21
Lumbers v W Cook Builders Pty Ltd (2008) HCA 27; 274 ALR 412,423.
22
(1946) 72 CLR 386.
23
(1987) 162 CLR 22; 69 ALR 577, 608.
24
(1952) 2 all ER 176.

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 ...it is not right to describe the result as one in which the Lumbers have in any sense
obtained a “windfall”. The economic result arrived at follows either from the bargain that
Sons made with them, or from the way in which Sons has subsequently dealt with the
bargain. It is not a result that follows from any thing that the Lumbers sought to have
builders do or refrain from doing.25

To recover restitution, Builders needed to claim against their contractual agreement with Sons. As the
ruling held, ‘...as a claim ought to be made by Builders it ought to have been made against Sons...It cannot
be said that the Lumbers have an obligation to make restitution to Builders’.26

As Builder’s claim should have been brought against Sons, promissory estoppel was also unavailable to
Builders in their claim against Lumbers. This was because in order for an estoppel to function, there had
to be an initial promise between the parties, which had then been withdrawn and therefore has caused
detriment to the party that relied upon it. Remuneration for Builder’s work was promised by Sons,
therefore restitution could only be made to Builders by Sons, as the court held, ‘Builder’s services were
not performed at the request of the Lumbers, but pursuant to a contract between Sons and Builders. There
was no acquiescence by the Lumbers in the provision of services by Builders.’27

The justices further concluded:

The Lumbers accepted no benefit at the expense of Builders which it would be

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The statement does not support the case of Lumbers v W Cook Builders as a contract did not exist
between the disputing parties and yet the court rightfully found no grounds on which Builders could claim
restitution or equitable estoppel against Lumbers. Builders had to look to Sons and hold them to their

25
Lumbers v W Cook Builders Pty Ltd (2008) HCA 27; 274 ALR 412, 441.
26
Lumbers v W Cook Builders Pty Ltd (2008) HCA 27; 274 ALR 412, 421.
27
Lumbers v W Cook Builders Pty Ltd (2008) HCA 27; 274 ALR 412, 425.
28

29
Lumbers v W Cook Builders Pty Ltd (2008) HCA 27; 274 ALR 412.

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obligatory duties in order to recover their loss. The case was peculiar in its three dimensional state, and the
exception to the rule.

5.CONCLUSION

Thus in the above chapters the researcher aims to clear the concept of quantum meruit. As we have seen
before, a breach of contract occurs when one of the parties fails to perform the functions he is obligated to
perform through the contract. And this breach leads to loss or damages to the other party to the contract.

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So the law of contracts provides provision of recovery of damages from the other party through other
means. The Indian Contract Act provides for relief and damages under sections 73, 74 and 75 of the
Indian Contract Act, 1872. Also the Specific Relief Act, 1963 provides for filing suits and injunctions.
The method of recovery of damages can be done through these three means: damages, quantum meruit
and specific suits for injunction.

Damages are the most common way to achieve monetary compensation for the loss or damage suffered. In
this case, the court awards certain fixed amount in lieu of the damages incurred by the other party.

Now the doctrine of quantum meruit comes into place. Quantum Meruit literally means ‘what one has
earned’ in Latin. In the language of law, it basically means the remuneration that one deserves for
whatever work has been done, whether partially or fully in the contract.

In this the plaintiff usually recovers damages for the amount of work done or services rendered for the
contract before the contract gets breached. It is also available in cases where the contract might have been
void ab initio. This relief is only available to the party who is not in default in the case of breach of
contract. Also, it can only be brought when the original contract, whether void or not, has been
discharged.

It is primarily a restitutive law, having its origins in English law, which seeks to restore the plaintiff to the
position he might have been had he never entered into the contract.

Also compensations by the way of Quantum Meruit are awarded when he price has not been fixed in the
contract. When the contract provides consideration for the services rendered, it is not given.

BIBLIOGRAPHY

1. Beatson, Jack; Burrows, Andrew; Cartwright, John, Anson’s law of Contract 29th ed. , Oxford

University Press

2. Bangya, R.K. , Contract-I, Allahabad Law Agency

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 3. Kapoor, S.K., Contract-I and Specific Relief Act, 12 ed. , Central Law Agency

4. Bare Act, The Indian Contract Act,1872, Universal Law Publishing Co. Pvt. Ltd.

5. www.icai.org

6. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2042652

7. http://www.slideshare.net/search/slideshow?searchfrom=header&q=quantum+meruit

http://www.lawyersclubindia.com/articles/QUASI-CONTRACT-A-COMPREHENSIVE-STUDY-OF-SI

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