Tuesday, May 9, 2006
The concept of quantum meruit is one of the slipperiest issues in damages law. It's clear that when a party is entitled to such damages it is supposed to get "as much as it deserves." But how much is that? Specifically, should it be able to recover its costs plus profits, or should be be awarded its proposed contract rates, which may be higher or lower than that amount?
A British court recently had to wrestle with that problem in a case involving work authorized under a letter of intent for which a contract was not finalized. Should the contractor who did the work get its costs plus profits, or should it be stuck with its lower tendered rates? The court decided on the latter, noting that failure to conclude a contract shouldn't leave a party better off than if its tender had been accepted. In Quantum Meruit -- Valuation of Works Under a Letter of Intent, solicitor Jeremy Glover of London's Fenwick Elliott comments on the court's conclusions.