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Quasi-Contracts, Agreed Remedies And Non-Recoverable Damages

A. Recovery in Quasi-contract

Recovery in quasi-contract occurs in any one of three general situations: (1) if a contract never existed but justice requires that the plaintiff be compensated; (2) if there was an unenforceable contract (due to the Statute of Frauds, illegality, etc.); and (3) if the plaintiff has materially breached an existing, valid contract and has conferred a benefit on the other party. Courts generally award either restitution or reliance damages, depending on fairness and equity.

1. Requirements of Quasi-contract:

a. One party provided a benefit to another.

b. The benefit was provided with the “reasonable expectation” of compensation.

c. There was an express or implied request for the benefit.

d. Party receiving the benefit would be unjustly enriched if he was not forced to compensate the party providing the benefits.

The size of recovery in quasi-contract (also called quantum meruit) is determined by the degree of the plaintiff’s detriment.

If a party willfully breaches a contract, it is less likely that a court will grant quasi-contractual recovery, although this restriction is somewhat eased in cases of employment contracts in which an employee intentionally breaches.

4. UCC § 2-718
A breaching buyer may recover the value of payments made to the seller before the breach that exceed any liquidated damages clause or, if there is no such clause, the value of such payments in excess of 20 percent of the contract price or $500, whichever is less. The seller can offset such recovery by any damages suffered.

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