There are three questions to be asked before looking into whether a person may recover the amounts claimed or any part thereof in the contract. They are: the nature of the contract, the nature of the obligations; and the degree of performance which was rendered.

There are two types of contract when it comes to the nature of contract. They are divisible contract and lump sum contract. A divisible contract is one for which the consideration is apportioned according to the work to be done. One contract would be divided between the performance of work and the payment of consideration expressly.[1] A lump sum contract is one which provides for payment of specified sum on completion of specific work.[2] When the court look at the performing party’s whole obligations under the contract, the court would see whether the performance rendered satisfies the requirements of the contract as a whole. Nevertheless if a party who partially performs a lump sum contract will not be entitled to the contract price when it comes to damages and claim. They may however be entitled to damages or quantum meruit in some circumstances.[3]

It is important to look at the nature of obligation when it is not a divisible contract. The parties’ obligations under the contract can either be entire or non-entire. If obligation is entire, the contract will only be payable in exchange for exact performance for which the contract would be performed exactly according to the contract terms. If the contract however is not entire, the party will be entitled to claim the contract price in exchange for substantial performance of the contract.

When you wish to recover money from contract breaches, you would also need to look at the degree of performance. You would need to know whether the performance required by the contract rendered sufficiently in accordance with the contract so as to entitle that party to payment of the contract price either for the whole of the contract or the relevant divisible parts. Contractual party wishing to recover the price may have performed the contract exactly, substantially, or only in a partial way.

If there is exact performance, you can cover the whole contract price. If however a contract or part of a divisible contract is substantially performed, the party will be entitled to the contract price less an amount for rectifying the defects in the performance.[4] A party will be considered to have substantially performed a contract where such the defects in the goods or services are of a minor nature. The court would look into the nature of the defects and the relative costs of rectifying the defect compare to the contract price.[5]

There are two alternative remedies when it comes to partial performance. The first is for the party who has undertaken work or has provided services or goods to seek damages for the breach of the other party. Another option is to make a claim in quantum meruit, meaning reasonable value of services performed by the party. Quantum meruit is a claim in restitution for the return of a benefit provided to the other party. This is especially the case when a party performs a valuable service for another party in a written contract or agreement before performing the service. The purpose of quantum meruit is to prevent unjust enrichment of the other party. Quantum meruit can be used in situations where there is no contract existence or where a contract does exist but for some reasons which is not enforceable. A court may measure how much the other party (the defendant) has benefited from the transaction or performance and to determine how much the party (the plaintiff) has expended in materials and services.                                                                                                                                                                                                                                                                                                                                                             


[1] Steele v Tardiani (1946) 72 CLR 386.

[2] Hoening v Isaacs [1952] 2 All ER 176.

[3] Appleby v Myers [1867] L.R. 2 C.P. 651.

[4] Hoening v Isaacs [1952] 2 All ER 176.

[5] Bolton v Mahadeva [1972] 2 All ER 1322.

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