To recover in a breach of contract case in Tennessee, a party must prove that there was an enforceable contract. In Tennessee, an agreement must meet several requirements before it can be considered a legal contract. For example, there must have been a “meeting of the minds” between the parties and the terms of their agreement must be definite enough to be enforceable in order for a contract to be formed. Believe it or not, more often than you might think, two parties conduct some type of business together without having an agreement that amounts to what a court would consider a contract.
So what happens when an aggrieved party cannot prove that there was a contract? Is that party then totally without any legal recourse whatsoever? Not necessarily. Tennessee, as do most, if not all other states, recognizes the legal doctrine of quantum meruit – – -also called unjust enrichment or quasi-contract.
Quantum meruit allows a court to award money to a party who has provided goods or services to someone else even though those parties never had a contract. In fact, a court can use quantum meruit to provide relief only when no legal contract is found to exist between the parties.
Breach of contract lawsuits in Tennessee often, if not almost all of the time, contain a cause of action for quantum meruit in addition to one for breach of contract. Every experienced breach of contract lawyer knows that a quantum meruit claim is good insurance in the event the breach of contract claims fails because the plaintiff cannot prove the existence of a contract.
A recent opinion of the Court of Appeals of Tennessee in a breach of contract case which included a cause of action for quantum meruit is a perfect place to start to try to understand quantum meruit. Here are the salient facts of that case:
• Watermark’s business was to bid and contract for the construction of hospital bathrooms
• Brown’s would perform the installation work for Watermark
• Watermark and Brown had a course of dealing whereby Watermark would bid projects based on Brown’s providing it an estimate of the cost of the work
• After construction started, Brown would submit detailed invoices to Watermark bi-weekly
• Watermark paid invoices of Brown’s for numerous projects
• Watermark and Brown never signed a written agreement
• Watermark and Brown had a falling out
• Brown sued Watermark for work it alleged it had performed, but for which Watermark had not paid
The trial court, the Chancery Court for Davidson County, Tennessee, found that no legally enforceable contract, either oral or written, had ever been formed between Watermark and Brown. The opinion does not go into any detail about the basis of the trial court’s finding, but it is apparent that the reason there was no contract was because the parties never had a meeting of the minds about essential terms of their agreement. Although Watermark paid Brown for work for numerous jobs based on invoices submitted by Brown, before the work was done and payment was made, the parties never had any agreement, much less a definite one, about how much Brown would charge or how much Watermark would pay. All they had was a course of conduct.
Having determined that no contract existed, the trial judge determined that, nevertheless, Brown was entitled to recover in excess of $75,000 under the theory of quantum meruit. To prevail on a quantum meruit or unjust enrichment claim in Tennessee, a plaintiff must prove the following elements:
(1) That no legally enforceable contract existed between the parties;
(2) the plaintiff provided valuable goods or services;
(3) the defendant received the goods or services;
(4) under the circumstances, the parties reasonably understood that the plaintiff expected to be paid; and
(5) it would be unjust for the defendant to retain the goods or services without paying for them.
The trial judge determined that Brown had proven all elements necessary to recover under quantum meruit and her decision was affirmed on appeal.