Quantum Meruit and UAE Civil Law

In brief

• Claims for fair renumeration for work done can be considered.

• UAE law provides for quantum meruit, albeit not in name

• No agreement as to fee will prevent a claim, even if there is a valid contract.

When it comes to contractual remedies, one remedy that is often overlooked is that of ‘quantum meruit’ or to give its translated term ‘the amount deserved’ or to be even more specific ‘what the job is worth’. There is also quantum valebant, which applies to the value of goods sold and delivered as opposed to services, which quantum meruit applies to.

Quantum merit itself is a common law equitable remedy, but some civil codes, especially the UAE Civil Transaction Code, does in fact provide for quantum meruit claims, albeit not in name.

So, what exactly is quantum meruit and when can you claim it?

In English Common Law, quantum meruit is not as straight forward as one would think. Generally speaking, a quantum meruit claim can only be considered if there is no valid contract between the parties and it is considered a restitution damages claim, rather than an agreement to pay a reasonable sum (Forman’s Electrical Contractors v Elecref Ltd [2009] TCLR 6). It has been held that a claim for quantum meruit cannot exist if the parties had an agreement to pay an agreed sum (Gilbert & partners v Knight [1968] 2 All ER 248).

Gilbert went on to reaffirm the decision in Steven v Bromley & Son [1919] where Lord Dunedin applied the dicta:

‘Regarding quantum meruit, where 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.’

More recently, the Supreme Court considered quantum meruit claims and offered some clearer guidance. In Benedetti v Sawiris & Others [2013] UKSC 50, the Supreme Court stated that there are two types of quantum meruit claims, one where there is no valid and subsisting contract between the parties, the other where there is no contract at all. The Supreme Court went on further to state that the correct approach to take when there is no contract is to consider whether the defendant had been ‘unjustly enriched’ and if so to what extent. If there is unjust enrichment, then quantum meruit may apply.

*There are other instances where Common Law will consider quantum meruit, such as quasi-contracts or no fixed price contracts, but for this article I shall not explore those.

UAE Civil Code position

Contrast this to the UAE Civil Transaction Code (CTC), Art 888. Art 888 states:

‘If the consideration for the work is not specified in a contract, the contractor shall be entitled to fair renumeration, together with the value of the materials he has provided as required by the work.’

Upon a strict interpretation of Art 888, it is clear this Art will not apply if there is a valid and subsisting contract that gives due consideration to the work, much like the common law approach, the ‘old contract must be got rid of in order to have a new contract’. Nevertheless, both quantum meruit & quantum valebant appear to be covered by Art 888.

UAE CTC does go further with Art 889, which allows for quantum meruit based claims in specific circumstances:

Art 889 (1) allows for fair renumeration where an Architect who has planned the building and supervised the performance, but not agreed upon a fee, is entitled to fair renumeration in accordance with custom.

Art 889 (2) allows for fair renumeration where any unforeseen event occurs, the effect of which prevents the completion of the performance of the work in accordance with the plan prepared.

It is the 2nd limb that is of interest, because this does not require the parties to be working outside of an agreed contract, unlike Art 888 or Art 889 (1). Notwithstanding this, it is clear that Art 889 (2) will only really apply whereby some unforeseen intervening act prevents the performance, such as force majeure, frustration etc.

Most contracts, especially in the UAE, have clauses that deal with force majeure [1], under Art 273 or frustration under Art 472[2], but many fail to understand that Art 889 (2) may come into play, as many think they are safe because there is a valid contract, thus defeating a quantum meruit based claim.

Conclusion

Be mindful that whilst quantum meruit under common law requires no valid contract plus unjust enrichment, under UAE Civil Law this can be by-passed by Art 889(2), in limited circumstances.

Be careful when drafting force majeure clauses, because whilst it is common to express that the parties can be exempt from all obligations, including payment, Art 889 (2) may operate to prevent full exclusion as you are not able to exclude statutory rights under UAE law.

Finally, carefully consider any variation clauses within your contracts. In some circumstances a variation can be seen as a ‘new contract’ and in many cases work commences on such variations without agreeing a fee. As such Art 888 could apply, much like quantum meruit can apply in certain instances in Common Law for work ‘outside the contract’.