As described in the last Construction Law Comments, a contractor or subcontractor who fails to complete its contract without adequate legal excuse forfeits its right to any payment. (See Construction Law Comments — Fall 1998). But what about the contractor or subcontractor who fails to fully complete its contract despite trying its best to achieve completion? Can that contractor recover? And if so what is its measure of recovery?
Quantum meruit may appear to be a quaint Latin phrase, but to contractors seeking payment for partial performance of a contract these are magic words.
Under long standing Massachusetts law, any contractor or subcontractor who has substantially performed and who has honestly attempted to fully complete its contract, is entitled to payment. The amount due in that circumstance is the difference between the contract price and the value of the work left incomplete. In almost every instance, the value of the incomplete work is the other party’s cost to complete the work. The measure of the contractor’s recovery would be the contract price less the cost to complete the items left incomplete.
The only exception is that rare circumstance where the incomplete work cannot be completed in accordance with contract requirements because it is inaccessible. In that instance, the amount deducted from the contract price would be the diminished value of the project resulting from the incomplete work.
This quantum meruit measure of recovery recognizes that the owner has done nothing wrong and should be placed in the exact financial position as if the contractor had fully completed its performance. At the same time, it attempts to fairly compensate a contractor or subcontractor who has failed to complete its contract fully, but who has rendered valuable services and has attempted in good faith to complete fully.
This
newsletter is intended to provide general information of interest to the
construction industry. It is not intended to provide specific legal advice or
to address fact specific issues. For that you should consult your legal
counsel. Corwin & Corwin LLP assumes no liability in connection with the
use of this newsletter. The Supreme Judicial Court may consider this material
advertising.
©1992-2000 Corwin & Corwin LLP. All rights reserved.