Women wearing denim jacket and man wearing a blue skirt sit together at a table as they look at a laptop screen

How to claim for unapproved variations? Quantum meruit in construction contracts

Ben Johnson ||

Co-authored by Bailey Fraser and Jace Coaldrake-Redhouse

Building contracts establish the relationship between a builder and owner. Often however, changes are made to the scope of work during the course of a project that are not anticipated in the contract. This can be due to a variety of reasons including design changes, materials shortages, unforeseen site conditions or design changes requested by the owner. These changes are known as variations. Most building contracts will require variations to be documented in writing prior to work on the variation starting.

But what if the variations haven’t been documented in accordance with contractual provisions and/or have not been signed off by the owners?

Such work is considered an unapproved variation and can occur for a variety of reasons. In these cases, a builder will, at first instance, not be entitled to claim payment for unapproved variations under the original contract.

Quantum meruit provides a basis for claiming the value of work done where variations haven’t been approved in accordance with the contract. This article will explain the principle of quantum meruit and its application for builders who wish to claim payments for unapproved variations.

What does quantum meruit mean and how does it apply to construction contracts?

In the context of construction contracts, quantum meruit is a principle commonly applied to claim for remuneration for work completed or material supplied that is outside the scope of the original contract, or where the contract does not provide directions for payment of additional work.

Under what conditions can a quantum meruit claim be justified in the context of an unapproved variation?
  • In NSW, there are several key components of a quantum meruit claim, These include: The work performed must fall outside the scope of the original contract.
  • The owner must have had actual knowledge of the variation as it is being done and understand that the work is outside the scope of the original contract.
  • The homeowner must be aware that the builder expects payment for variation of work.
  • The builder must provide evidence that the claimed amount was fair value for the work performed.

When deciding a reasonable sum for a variation, the court will take several factors into account including;

  • The commercial rate for the work;
  • The overall contract price, and whether the contract refers to certain prices or formulas;
  • The conduct of the parties;
  • The quality of work; and
  • Site conditions.

A number of these questions may require expert evidence.

Practical advice to maximise the success of a quantum meruit claim:
  • Maintain detailed documentation: Contractors should ensure there is a thorough record of all tasks completed, especially those that extend beyond the scope of the original contract. This should include logging time expended, materials utilised and any additional expenses accrued.
  • Obtain written agreement: The standard form home building contracts specify that any modifications must be documented in writing and mutually signed. If the owner declines to sign, document their refusal and your efforts to obtain their consent.
  • Ensure transparent communication: The contractor should provide clear information to the owner about any variations as they occur. This includes explaining the necessity of the variation, its impact on the project and any supplementary cost involved.
  • Equitable pricing: The invoiced amount should accurately reflect the fair value of undertaken work. This can be substantiated through prevailing market rates, estimates from other builders, or the costs of materials and labour.

As each case is unique, determining the validity of a quantum meruit claim can be complex. If you need guidance about quantum meruit or construction contract disputes, please contact our building and construction team.

For more information on quantum meruit claims, please contact Coleman Greig’s experienced Building & Construction team.

Share:

Send an enquiry

Any personal information you provide is collected pursuant to our Privacy Policy.

Categories
Archives
Author

More posts

Employers should exercise caution when dismissing during probationary period

Can you dismiss an employee during the probationary period? Yes, but a recent case is a lesson in caution. The recent Federal Court decision of ‘Dabboussy v Australian Federation of Islamic Councils’ is a warning to employers to consider the importance of timing if dismissing an employee during probation.

The business impacts from the Government’s new cyber security laws

Cybercrime ‘is a multibillion-dollar industry that threatens the wellbeing and security of every Australian’. In an effort to combat the impact on businesses and individuals, the Australian Government has introduced cyber security legislative reforms into the Parliament.

A guide to intrafamily adoption

Adoption is the process where a parent’s legal rights for their child are transferred to another person. The formal adoption of a stepchild or close relative is known as intrafamily adoption.

Passenger movement and visa data-matching by the ATO

Heading overseas for work or a holiday? Taxation issues, including tax residency, should be on front of mind when departing from or arriving to Australia. Why? Because the Australian Taxation Office (ATO) can follow your footprints and, if you’re not careful, spring unexpected taxes on you.

Is it really necessary for my executor to have so many powers?

People often question why the executor of their estate needs to have so many powers. Simply put – if your executor isn’t given any additional powers by your Will, then they are limited to what is set out in the Trustee Act. One area that this can lead to issues in, is the family home – particularly if beneficiaries aren’t in agreement.

Essential terms of a commercial lease

A commercial lease is a contract that details the rights and obligations of a tenant and landlord. So, what are the necessary terms of a commercial lease?

Responding to data breaches

In the final part of our four-part series on your business’ responsibilities related to cyber attacks and data breaches, Special Counsel John Bennett how businesses should respond to data breaches, including application and requirements of the Notifiable Data Breaches Scheme.

Security of personal information

Part 3 of a four-part series on your business’ responsibilities related to cyber attacks and data breaches where Special Counsel, John Bennett provides an overview of some court decisions and proceedings where ‘security’ of personal information has come into issue.

Parental alienation in Family Law

The concept, Parental Alienation Syndrome, was initially brought about by American psychiatrist Richard Gardner in 1985. The term parental alienation is used to describe a situation where one parent is involved in psychologically manipulating their child to turn against the other parent.

Are you liable for labour hire workers if they are injured?

Many employers (host employers) engage employees of labour hire companies, particularly in the building and construction, hospitality and manufacturing industries. However, what happens when one of these employees gets injured at the host employer’s work site? Who is liable for the injuries?

© 2024 Coleman Greig Lawyers  |  Sitemap  |  Liability limited by a scheme approved under Professional Standards Legislation. ABN 73 125 176 230