Claims for the fair value (quantum meruit) of a
construction contractor's works are sometimes available when
there is no right to be paid under a construction contract.
Where the contractual payment regime fails part-way through the
works, the contractor's fair value claim is not always equal to
the percentage of works completed times the total contract
Objectors say this violates the sanctity of the bargain between
principal and contractor by substituting the courts' valuation
of the contractors' works for the value that the parties
themselves agreed to give to the works by their own contract.
However, properly understood, it is precisely out of a concern
not to interfere with the bargain between contractor and principal
that courts will not apportion the contract price for work that is
To take the total contract price for the works and award the
contractor a percentage of that agreed price based on how much of
the works were completed would require courts to make a judgment
call about how the contract price should be apportioned. The
court's judgment would then be substituted in a way that the
contract does not contemplate, for what the parties actually
agreed: that is, that an entire scope of work would be delivered
for an agreed lump sum price.
That is why the courts treat the entire contract as having
failed when the contract comes to an end before the works are
practically completed and why the courts award payment in such
cases on a basis that is independent of the contract price. It is
the same reason why a liquidated damages clause will be treated as
having failed altogether, and no LDs will be awarded at all for
delays, where even a small part of the delay was caused by the
Again, to award only part of the LDs that the contract says are
payable for a period of delay would require the court to substitute
its own judgment as to the fair apportionment of LDs for the
agreement that the parties actually made which is simply that LDs
will be awarded at a prescribed rate per day of delay. The courts
cannot substitute their own judgment for the parties' agreement
in this way without violating the sanctity of the bargain. So the
courts treat the entire LDs regime (like the entire payment regime
in the earlier example) as having failed and damages are assessed
independently of the LDs clause.
In extreme cases, the courts will not even make fair value
awards where to do so would be contrary to the purpose of a
statute. For example, it is currently the law in WA that an
unregistered builder cannot be paid anything, even on a fair value
basis, for construction work.
The cases that say this include:
Heathersage Nominees Pty Ltd\ v Pineview Holdings Pty Ltd
(Unreported WASC (Wallwork J); Library No 8478; 14 December
Steelhomes (1985) Pty Ltd v Hutts (1993) 9 SR (WA) 143, at 144
- 145; Great City Pty Ltd 
Again, in these cases, the courts have refused to substitute
their own notions of what is fair or just for the intention of the
WA legislature to make sure that people who do construction work
without being registered as builders are not rewarded for acting
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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Warranties can be risk-shifting mechanisms when the party giving the warranty is not the party at fault for the defect.
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