What does the term quantum meruit refer to in contract law?

The term quantum meruit refers to the principle of determining the amount that someone is entitled to recover for services rendered when no formal contract exists, or when there is an implied contract. In essence, it translates to "as much as he has deserved" from Latin, emphasizing compensation based on the value of work performed rather than on a contract's pricing terms.

This concept is particularly relevant in cases where a party has provided services without a written agreement but still seeks compensation for the value of those services. Quantum meruit allows the courts to assess what an appropriate payment would be—taking into account the extent of services provided and the circumstances surrounding the case—thereby ensuring that one party is not unjustly enriched at the expense of the other.

In contrast to the other options, a minimum wage requirement pertains specifically to labor laws regarding the lowest amount that can be paid for work, which is a separate issue from quantum meruit. A type of formal agreement implies a contract that has been explicitly established, and a penalty for breach of contract pertains to consequences that arise when contractual obligations are not met, which also does not align with the meaning of quantum meruit.