Quantum Meruit and the Restatement (Third) of Restitution and Unjust Enrichment

Article excerpt

I. INTRODUCTION

Thirty years ago, Professor Graham Douthwaite said that restitution can "arise in a bedazzling variety of situations."1 He also said that practitioners usually are not aware of "the restitutionary implications or potential" of their clients' problems.2 Over 50 years ago, Professor John Dawson said that "[i]t is doubtful even now whether most lawyers have an adequate conception of the range and resources of the remedy."3 About twenty years ago, I said of Professor Dawson's statement, "It is doubtful whether the situation has much improved in the last thirty years."4 Unfortunately, I can still repeat that concern.

I attribute the lack of understanding of this field to "a great deal of confusion in terminology"5 and "that its application has at times been confused and inconsistent."6 I also attribute the confusion to the age of the Restatement of Restitution, which was published in 1931.7 It has been hailed as a major work tying together concepts about restitution and unjust enrichment that had previously not been organized into a coherent whole.8 It is not always cited today; instead, a great array of terminology continues in often confusing usage. As one recent court notes, "Courts generally treat actions brought upon theories of unjust enrichment, quasi-contract, contracts implied in law, and quantum meruit as essentially the same. In fact, this 'terminology' is generally employed interchangeably, often within the same opinion."9

The American Law Institute is in the process of drafting a new Restatement of Restitution and Unjust Enrichment, the Restatement (Third), with Professor Andrew Kull as its Reporter.10 This immense undertaking should make the field much more accessible to the modern lawyer. Professor Kull has the advantage, and the overwhelming task, of examining and selecting from11 70 years of writings by lawyers and scholars, since the last Restatement.

The Third Restatement that is emerging is bringing clarity and precision to the field of restitution and unjust enrichment. This paper has evolved from a brief talk I gave at the Remedies Workshop of the American Association of Law Schools Annual Meeting in January, 2007. At this workshop, I focused on the clarity that the Third Restatement is bringing to the confusing area known as quantum meruit. About 20 years ago, I wrote an article analyzing quantum meruit cases because I had found them confusing in both my Contracts and Remedies texts.12 Reading more cases led me to conclude that the area of quantum meruit was confused. This paper will describe some of the confusion that existed, and continues to exist, in quantum meruit litigation. It will then discuss how the Third Restatements approach should eliminate much of the confusion.

II. CONFUSION WITH QUANTUM MERUIT

A. Reasons for Confusion

As I described in my article of 20 years ago, there were a number of reasons for confusion in the area of quantum meruit.13 One source of confusion is that quantum meruit is a cause of action in two fields: restitution and contract. Another is that in those two fields, quantum meruit has many synonyms. When quantum meruit is an action in restitution, it can also be referred to as a "contract implied in law" or a "quasi-contract." When it is an action in contract, it can be referred to as a "contract implied in fact." Not surprisingly, references were not always properly applied; nor are they 20 years later. For example, a court in 2004 classified unjust enrichment and quantum meruit actions as two different quasi-contract actions.14 None of these distinctions would be important, however, if the remedy for all were the same. But it is not-another reason for the confusion.

A contract implied in fact is a contract, but not an express contract.15 Its elements are typically described as a request by the defendant for plaintiff's services (an offer), which are performed (the acceptance) under circumstances in which the parties expect the plaintiff to be compensated (consideration). …