With the spread of Covid-19 across multiple continents, a contemporary endemic disease has seen the world experience its most recent pandemic. As at 3.30pm on the 16th of April the total number of confirmed cases of Covid-19 in New Zealand was 1,401. The total cases identified by each region’s District Health Board, however, is a little concerning, with 213 cases in the Southern region making up the biggest percentile. Given these statistics, it’s important to think about the impact that Covid-19 is having on us economically. One element of this is perhaps arrangements entered into before the pandemic broke out. You might be asking yourself “can I rely on someone who gave me their word?”

If you are a contractor and were relying on someone’s word that you would be paid, or you have a contract that doesn’t protect you against unforeseen circumstances like what we are now experiencing, you may be entitled to get relief through a long-standing avenue for relief. It’s called Quantum Meruit.

Quantum meruit literally means “what the job is worth”. It is a reasonable amount of money paid to a contractor where there is no agreement that includes a sum to be paid for work done.

You can ask for payment on a quantum meruit basis where there was no agreement as to the amount of money you would be paid for the work you did.

However, if you simply agreed that a ‘reasonable amount’ would be paid, or you have completed work outside of your agreement, or your contract is later found to be void or unenforceable, you can also seek payment on a quantum meruit basis.

Consider the following examples:

Bob is a builder who agreed to construct a carport for Lucy. Lucy got Bob’s number through a mutual friend, so there was no need for a formal contract. It was simply agreed in a conversation that Lucy would pay Bob ‘the going rate’ for his work. Bob agreed he would charge Lucy a ‘mates rate’ at the end of the job, based on the amount of time and material required.

Bob constructed the carport. He told Lucy that the materials cost him $3,000, and that he was happy to receive $1,500 for his time over the six days he worked. Lucy scoffed at this and refused to pay Bob, saying that she had just been laid off work and didn’t have any money.

Because there was no agreement as to the amount Bob was to be paid for constructing the carport, Bob is entitled to seek payment for the work he has done on a quantum meruit basis.

In another example, Connor was a plumber contracted by Matt to have his bathroom plumbed, which included the bath, vanity and shower. It was agreed that Connor was going to be paid $1,200 for this work.

When Connor was plumbing the bathroom, Matt came by and asked if Connor minded having look at the kitchen, because there was a terrible odour coming from the sink. Once Connor had finished the bathroom, he did as Matt requested. Connor found that the pipes had not been installed correctly from the kitchen sink and replumbed the kitchen as well.

When Connor charged Matt more than $1200 for the additional work he did in the kitchen, Matt disagreed. Connor is entitled to seek payment for the work he has done in the kitchen on a quantum meruit basis because it was work not included in the contract.

Basically, if you have completed work and not been paid, have a think and consider whether you are entitled to seek payment for the work you have done on a quantum meruit basis.

Business & Commercial Financing