When a business enters an agreement to perform services, the business hopes and expects several things. One is that the client will be satisfied and happy with the work completed. Another is that the client will pay the business the fee to which they agreed. When a client does not pay, the business must consider its options and proceed very carefully. One Central Florida entity suffered a painful setback because it erroneously attempted to recover under a theory that was only available in cases involving the existence of an implied contract. The 4th District Court of Appeal ruled against the business, deciding that the business and the client had an express contract, which prohibited the business from recovering under its theory of the case.
The underlying contract in this case was a 2009 agreement between Land Company of Osceola County, LLC and Genesis Concepts, Inc. Land retained Genesis for the purpose of assisting Land with obtaining governmental approval for Land’s City of Destiny project. The agreement dictated that Land was to pay Genesis $85,000 for a range of services. The contract also called for Genesis to receive a $25,000 retainer.
Genesis completed all of the work, but Land made none of the payments. Genesis sued, alleging that Land breached the contract and also asserting a claim of quantum meruit. Quantum meruit is a Latin phrase meaning “as much as he deserved.” In contract law, it means the actual value of the services performed. Recovery under a quantum meruit theory is only available in cases involving implied contracts.
Genesis abandoned its breach of contract claim and proceeded to trial only on its quantum meruit claim. It asserted that the conditions for a legally binding contract were never completed because Land did not pay Genesis the retainer. Without a legally binding contract, Genesis claimed it should be paid based upon the value of the services it performed.
The trial court accepted Genesis’ argument and awarded it $85,000 in damages. Land appealed and won. Damages under a theory of quantum meruit only exist when the court must imply the existence of a contract. In the case between Land and Genesis, the appeals court decided that the parties had an express contract, so a quantum meruit award was legally unavailable to Genesis.
In order for a contract to exist, the law requires only an offer, acceptance of the offer, consideration, and “sufficient specification of terms so that the obligations involved can be ascertained.” In Genesis and Land’s case, Genesis created a “Letter of Agreement” that laid out the terms of the business relationship and also indicated that Land could accept the proposed deal by signing the letter within 30 days, which both Land and Genesis did. The letter made no mention of the payment of the retainer serving as a condition Land must fulfill prior to the formation of a contract. As a result, once Land signed the letter within the time-frame set out by Genesis, the parties had a contract, the appeals court determined. Since the parties had an express contract and quantum meruit damages are available only in cases of implied contracts, the appeals court instructed the trial court to issue a judgment in favor of Land.
Plotting a path for how to proceed when a client does not pay your business for services rendered requires business sense. It also involves knowledge of the law. For the legal advice and zealous representation your business needs, consult the Florida commercial litigation attorneys at Stok Folk + Kon. Our attorneys can help you select the plan that best protects your business’ vital interests.
Contact us online or by calling (954) 237-1777 to schedule your consultation.
More blog posts:
Company’s Lack of Bad Intent Allows It to Escape Contempt in Florida Breach of Contract Case, Florida Business Lawyers Blog, May 27, 2015
Florida Business Owners Not Required to Arbitrate Due to Agreement’s Narrow Language, Florida Business Lawyers Blog, April 30, 2015