Can a claim for quantum meriut be excluded within a contract?
1. Can a claim for quantum meriut be excluded within a contract?
2. The removal of common law rights through contract
3. Quantum meriut unavailable if there is a valid and enforceable contract.
4. Claiming Quantum Meruit outside the contract
5. Do exclusion clauses survive termination of a contract?
6. Recent High Court decision regarding Quantum Meruit
1. Can a claim for quantum meriut be excluded within a contract?
In a word, yes!
Courts in both England and Australia have held that the construction of a contract may
preclude common law rights1, including quantum meruit claims, provided they are not statute
barred and that the wording is clear.
2. The removal of common law rights through contract
There is a lot of case law that supports the exclusion of common law rights through
contracts. The following cases are just a small example of what is available and show that
the constant assertion is that any bar to common remedies must be clearly worded so as to
remove any doubt as to the rights and obligations available under the contract.
Concut Pty Ltd v Worrell [2000] HCA 642

[23] “… In Castlemaine Tooheys Ltd v Carlton & United Breweries Ltd16, Hope JA identified
contracts between master and servant as a typical class of contract in which terms will be
implied by law. Such terms apply in the absence of an expression of contrary intention by
the parties17. In discerning that intention, regard should be had to "the familiar principle of
construction that clear words are needed to rebut the presumption that a contracting
party does not intend to abandon any remedies for breach of the contract arising by
operation of law" 18. Thus, an express provision for termination for breach in certain
circumstances may be regarded as designed to augment rather than to restrict or remove
the rights at common law which a party otherwise would have had on breach19.
16 (1987) 10 NSWLR 468 at 487.
17 Byrne v Australian Airlines Ltd (1995) 185 CLR 410 at 449-450.
1
https://www.pwc.com.au/legal/assets/investing-in-infrastructure/iif-2-exclusive-remedies-feb16-3.pdf
2
http://eresources.hcourt.gov.au/downloadPdf/2000/HCA/64
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18 Stocznia Gdanska SA v Latvian Shipping Co [1998] 1 WLR 574 at 585; [1998] 1All ER 883 at 893; Modern Engineering
(Bristol) Ltd v Gilbert-Ash (Northern) Ltd [1974] AC 689 at 717.
19 Holland v Wiltshire (1954) 90 CLR 409
Decor Ceilings Pty Ltd v Cox Constructions Pty Ltd (No 2) [2005] SASC 4833

[66] There is no doubt that parties can, if they wish, make compliance with a certain
procedure a precondition to an extension of time by reason of delay or disruption or a
claim for loss and damage resulting from delay or disruption. The question whether the
parties have done that is to be determined as a matter of the construction of their
contract. An intention to exclude the ordinary remedies arising on a breach of
contract must be expressed in clear and unmistakable terms (Gilbert-Ash (Northern) Ltd v
Modern Engineering (Bristol) Ltd [1974] AC 689 per Lord Diplock at 717-718; Mancorp Pty Ltd v Baulderstone Pty Ltd
(trading as Baulderstone Hornibrook) (No 2) (1992) 60 SASR 120).
Barreau Peninsula Pty Ltd & Ors v Ambassador at Redcliffe Pty Ltd & Ors [2008] QSC
904

[27] It seems to me that, notwithstanding the literal wording of the clause, the
construction of the contract proposed by the Plaintiffs is to be preferred. The clause is,
in my view, ambiguous. In light of this ambiguity, I would be reluctant to adopt a
construction of it by which one of the parties forfeits ordinarily available common
law rights, specifically the right to retain a deposit in case of default by a purchaser. In
this respect, Concut Pty Ltd v Worrel is instructive. In that case the High Court indicated
that “… clear words are needed to rebut the presumption that a contracting party does
not intend to abandon any remedies for breach of the contract arising by operation of
law”[9] and went on to note that “an express provision for termination for breach in
certain circumstances may be regarded as designed to augment rather than to restrict
or remove the rights at common law which a party otherwise would have had on
breach.”
J-Corp Pty Ltd -v- Mladenis [2009] WASCA 1575

[3] It is well established that an intention to exclude the common law right to
damages for breach of contract must be expressed in clear and unambiguous
3
https://jade.io/article/178708
4
https://www.queenslandjudgments.com.au/caselaw/qsc/2008/90/pdf-view
5
https://jade.io/article/99076
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terms. See, for example, Concut Pty Ltd v Worrell [2000] HCA 64; (2000) 75 ALJR 312 [23] (Gleeson CJ,
Gaudron & Gummow JJ); Décor Ceilings Pty Ltd v Cox Constructions Pty Ltd (No 2) [2005] SASC 483; (2007) 23 BCL
347 [66] (Besanko J).

[8] I agree with Newnes JA that on a proper construction of the contract between the
appellant/builder and the respondents/proprietors, the parties did not express in clear
and unambiguous terms an intention to exclude the common law right to
damages for breach of the appellant's/builder's obligation to complete the works on
time. Clause 11.9, in the context of the contract as a whole, manifests an intention that
the standard form liquidated damages clause should, in substance, be excluded, but
does not, in my view, manifest an intention that any and all remedies (whether under the
contract or at common law) should be excluded.
Hevilift Limited v Towers [2018] QCA 896.

[88] A term will not be implied by law if it is excluded by an express provision of
the contract or is inconsistent with its terms.
H W Nevill (Sunblest) v William Press & Sun (1981) 20 BLR 787.

[88] It is well established that if a party’s common law right to sue for damages for
breach of contract is to be removed contractually, it must be done by clear words.
Turner Corporation Ltd (Receiver and Manager Appointed) v Austotel Pty Ltd (1994) 13
BCL 3788.

If on the proper construction of the contract as a whole, it can be said that a party has
surrendered its common law rights to damages, that construction must be given effect
to, notwithstanding absence of express words surrendering the common law rights to
damages.

It is clear that whether the terms of a contract constitute a codification of the
rights and liabilities of the parties so as to exclude common law rights to
damages depends on the construction of each individual contract:
6
https://www.queenslandjudgments.com.au/caselaw/qca/2018/89/pdf-view
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3. Quantum meriut unavailable if there is a valid and enforceable contract.
Perum Building & Construction Pty Ltd v Tallenford Pty Ltd [2007] WASCA 2459

In this decision, the Western Australian Court of Appeal applied the well-established

principle that a contractor cannot claim payment for work done on a restitutionary
quantum meruit basis if there is a valid and enforceable contract governing its right to
payment.

The Court of Appeal emphasised that the contractual allocation of risk was a matter for
the parties and was determined by the contract. A restitutionary claim that would
subvert or undermine the contractual allocation of risk will not be allowed by the
courts.
4. Claiming Quantum Meruit outside the contract
In my, unlearned opinion, there seems to be case law that allows one to apply common law
remedies such as unjust enrichment and quantum meruit claims despite the contract
prohibitions.
My reading of this principle is that

Any rights or remedies accrued under the contract must be pursued through the
contract.

However, once a contract has been terminated, one may be entitled to apply for
common law remedies outside the contract.
Pavey & Matthews Pty Ltd v Paul [1987] HCA 510.
This case stands for the proposition that quantum meruit is based not on an implied contract,
but on a claim to restitution or unjust enrichment and arises from the acceptance of benefits
accruing to one party as a result of the work done by the other.
Further, the obligation to pay fair and just compensation for a benefit which has been
accepted will only arise where such an agreement is frustrated, avoided or unenforceable.
Facts
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
Pavey & Matthews were renovating a cottage for Mrs Paul.

The contract was oral, rather than written.
Page 29 https://data.allens.com.au/pubs/pdf/const/AustralianConstructionLaw2008YearinReview.pdf
https://jade.io/article/67385
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
Mrs Paul only paid $36,000. Pavey & Matthews claimed that $62,945.50 “represents a
reasonable sum for the work done and materials provided”.

The contract was considered unenforceable because it was not written, as otherwise
required by s 45 of the Builders Licensing Act 1971 (NSW).

the High Court held that a right of a builder to recover on a quantum meruit does
not depend upon the existence of an implied contract but on a claim to restitution
independent of contract.

[12] Mason CJ & Wilson J “However, when success in a quantum meruit depends, not
only on the plaintiff proving that he did the work, but also on the defendant’s acceptance
of the work without paying the agreed remuneration, it is evident that the court is
enforcing against the defendant an obligation that differs in character from the
contractual obligation had it been enforceable.”

Deane J at pages 256 & 257 “unjust enrichment in the law of this country… constitutes
a unifying legal concept which explains why the law recognises, in a variety of distinct
categories of case, an obligation on the part of a defendant to make a fair and just
restitution for a benefit derived at the expense of a plaintiff and which assists in the
determination, by the ordinary processes of legal reasoning, of the question whether the
law should, in justice, recognise such an obligation in a new or developing category of
case…”
Cohen v Zanzoul trading as Uniq Building Group [2020] NSWSC 59211
This case sees a builder seeking payment under the contract or, in the alternative, a
quantum meruit claim.
Stevenson J considered whether restitution on the basis of a quantum meruit available.
where there is an enforceable contract and rights have accrued under that contract.
Following the HCA decision in Mann, he held that a quantum meruit claim would not be
available as there are enforceable rights which have accrued under a contract.

If a contract is terminated by the acceptance of a repudiation, any accrued rights, and
obligations, such as a cause of action for debt or damages, remain on foot.

A quantum meruit claim is not available to the extent there are enforceable rights which
have accrued under a contract, notwithstanding the contract has been terminated
following repudiation.
11
https://jade.io/article/730323?at.hl=home+building
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
Stevenson J [190] “rights and obligations which arise from the partial execution of the
contract and causes of action which have accrued from its breach alike continue
unaffected”.12
CMF Projects Pty Ltd v Riggall [2014] QCA 3113
One of many cases where a builder did not comply with an Act thus was barred from
recovering money but was still able to recover monies through a quantum meruit claim.
The court held that the appellant had a common law right to raise a claim for quantum
meruit. Although the court recognised that statute may remove a common law right, the court
held the legislative intention to take away that right must be clearly expressed.

The right of a builder to sue on a quantum meruit following acceptance of an owner’s
repudiation of a contract.

A claim in quantum meruit is not a claim on, or for the enforcement of, the contract
but a claim which is independent of contract.

By the quantum meruit claim in the present matter the appellant was not attempting
to enforce the cost-plus contract which was not in accordance with the DCBA.
Kyren Pty Ltd v Wunda Projects Australia Pty Ltd [2012] SASCFC 2314
This case seems to allow that one’s common law right to damages comes into play once the
contract is terminated.

[118] Wunda submitted that the termination provisions are not exclusive of the
parties’ common law rights. Mr Whitington contends that AS2124 cl 46.1 is directed
at claims made by the contractor relating to a breach of contract while the contract is
still on foot. Once the contract has been repudiated, the innocent party to the
repudiation has a common law right to damages. Once the contract is terminated,
the common law right to claim is activated and it is not necessary to comply with cl
46.1. Mr Whitington submits that the claim for loss of profits could be characterised
as a claim for the contract sum, at least in part, and therefore no notice under cl 46.1
was required.

[121] we agree with the submissions of Mr Whitington that Wunda would have been
entitled to damages under the common law in any event following Kyren’s
termination of the contract.
12
Citing Mann v Paterson Constructions Pty Ltd [2019] HCA 32, at [8] (Kiefel CJ, Bell and Keane JJ) and McDonald v Dennys Lascelles Ltd
(1993) 48 CLR 457.
13 https://www.queenslandjudgments.com.au/queensland-reports/judgments-selected-for-reporting/editors-note/86570
14 https://jade.io/article/262232
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Gambaro Pty Ltd v Rohrig (Qld) Pty Ltd [2018] QCA 327
I have only included this case as it shows that one cannot rely on a clause in a terminated
contract for restitution.

[27] For this reason, I respectfully agree with the reasons of the Chief Justice that
Gambaro had no real prospect of demonstrating that clause 2.1 of the Contract survived
termination so that it could constitute the basis for a claim in restitution. The Contract
was at an end and the clause had no further operation as between the parties by way of
contractual obligation. Because the Contract was at an end, the terms could not form
the sole basis for the restitutionary claim, as the Chief Justice rightly concluded.
McDonald v Dennys Lascelles Ltd (1933) 48 CLR 457
Established the orthodox position that such contracts are binding up to termination but
not for the future. Rights accrued to termination are enforceable, but claims relating to the
future, such as for partially completed stages of work where payment rights have not yet
accrued, are not governed by the contract.
For those future claims, contractors can elect between damages for breach of contract and
quantum meruit.

‘When a party to a simple contract, upon breach by the other contracting party of a
condition of the contract, elects to treat the contract as no longer binding upon him, the
contract is not rescinded as from the beginning. Both parties are discharged from the
further performance of the contract, but rights are not divested or discharged which have
already been unconditionally acquired. Rights and obligations which arise from the
partial execution of the contract and causes of action which have accrued from its
breach alike continue unaffected.’
5. Do exclusion clauses survive termination of a contract.
6. Recent High Court decision regarding Quantum Meruit
Mann v Paterson Constructions Pty Ltd [2019] HCA 32
Question 1: Did Section 38 of the Domestic Building Contracts Act 1995 (Vic) restrict the
common law rights to recover money.
Issue 1: Section 38 of the Domestic Building Contracts Act 1995 (Vic) requires that all
variations be in writing.
Held: Builder was not entitled to recover any money in respect of a variation because the
builder had not complied with the notice requirements of the section. with respect to claims
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for variations claims under major domestic building contracts, section 38 of the Act excluded
a quantum meruit or a restitutionary remedy and required compliance with the provisions of
the Act to enable recovery.
Question 2: Could a recovery of restitution be used as an alternative to contractual
remedies.
Issue: [162] As s 38 has no application to that part of the respondent's claim that was not in
respect of variations, it is next necessary to determine whether the respondent was entitled
to recover restitution for a cause of action in the category of unjust enrichment (rather than
for amounts due under the contract or damages for breach of contract).
Held: The High Court determined that the builder's right to recovery will depend upon at
what stage and what works have been completed under the contract at the time of
termination as follows:
1. where the builder has completed a stage of the contract or where rights are accrued
when termination occurs, the right to recovery is for the amount due under the contract
for that work and any damages for breach. The builder's right to recovery in respect of
completed stages does not lie in quantum meruit but is limited to the builder's rights
under the contract or damages for breach of contract;
2. where there are uncompleted stages of work at the time of termination, the builder is
entailed to claim damages or alternatively on a quantum meruit basis but the amount
recoverable should not exceed a fair value calculated by reference to the contract price.
Discussion15

The majority, Nettle, Gordon, and Edelman JJ, with whom Gageler J agreed and
provided separate reasons (all agreeing with the minority in rejecting the rescission
fallacy) adopted an “intermediate path,” leaving the door open for a quantum meruit
claim for work which a plaintiff has performed but which does not qualify the plaintiff for
a payment under a contract.

While the effect of the judgment of the majority is that a quantum meruit is still available
on a more limited basis, the majority also found that the contract price should generally
act as a ceiling on recovery, with Nettle, Gordon and Edelman JJ stating that ceiling
15
https://www.mondaq.com/australia/contracts-and-commercial-law/972248/quantum-meruit-no-longerthe-panacea-of-the-contractor
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might be breached in exceptional circumstances, without stating exhaustively what
those circumstances might be.

Restitution upon termination for breach At least since the decision of Dixon J in
McDonald v Dennys Lascelles Ltd, it has been accepted that, where a party to a
contract elects to accept the other party's repudiation of the contract, both parties are
released from contractual obligations which are not yet due for performance, but existing
rights and causes of action continue unaffected.

The "qualifying or vitiating" factor giving rise to a prima facie obligation on the part of the
enriched party to make restitution is a total failure of consideration, or a total failure of a
severable part of the consideration.

where the builder has completed a stage of the contract or where rights are accrued
when termination occurs, the right to recovery is for the amount due under the contract
for that work and any damages for breach. The builder’s right to recovery in respect of
completed stages does not lie in quantum meruit but is limited to the builder’s rights
under the contract or damages for breach of contract.

Where there are uncompleted stages of work at the time of termination, the builder is
entailed to claim damages or alternatively on a quantum meruit basis but the amount
recoverable should not exceed a fair value calculated by reference to the contract price.
DETERMINING CONTRACTS: CONTRACTUAL RIGHTS v COMMON LAW RIGHTS.16
Andrew Kelly, Clayton Utz, Brisbane
Brighton Australia Pty Ltd v Multiplex Constructions Pty Ltd [2018] VSC 246
Liability under section 18 of the Australian Consumer Law cannot be excluded by contract.17
16
http://classic.austlii.edu.au/au/journals/AUConstrLawNlr/2002/33.pdf
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