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Ask a Lawyer -- Contract Law
Contract Law Question 3
Question: If I provided consulting services for someone and invoiced him for $1500 to be paid within 30 days of receiving then invoice. Then two days after my first invoice he asked me to do additional consulting which was agreed on and delivered but we never stated an actual price for the second job. Then I sent another invoice showing that $1500 for first consulting job and $900 for second consulting job. I received a payment of $1500 for the first job and a note saying that the $1500 was for both consulting jobs that I did because he felt that I was charging too much so he didn't pay me the additional $900 for the second job. And if I was to cash this $1500 check this mean that I agreed to give up all rights to ask for any additional compensation. I needed the $1500 so I cashed the check. Can I still sue for the $900 he owes me even though I cashed the $1500 check?
Response: That's a long question even though some facts are missing. Was there a written agreement for the original work for which you billed the individual $1500? There is no binding contract until there is a "meeting of the minds" over the essential terms of the contract that must include a price component. Thus, if you offered to perform work for the client and he accepted but no price was agreed upon, then there is no binding contract. The price does not need to be a flat fee to have a binding contract (for instance it can be an hourly rate); however, some mechanism must be agreed upon between the parties by which a price can be computed after the work is completed. If there is no agreement (or the agreement lacks a price component), what you are entitled to is "quantum meruit", which is Latin for the value of the work performed. In quantum meruit, both sides can argue what is the market "value" of the services performed so the case becomes tougher for the service provider. Here is a link to a California case where the court discusses the concept of quantum meruit (see page 4 of opinion).
Let's assume you had agreed in writing with the client to a price of $1500 for the original work prior to performing the services. You complete the work and send a bill. That's a completed contract. The agreement for the additional work would be a new contract (even though it builds off the prior agreement). If no price was discussed, then no binding contract. You are back to suing him under quantum meruit for the value of the additional work. That's murky enough but you compounded the problem by accepting the $1500 check. If there is a dispute for payment of goods or services and the buyer tenders a check marked "payment in full" (or something having equivalent meaning), this check represents a settlement offer. Your act of cashing the check operates as an acceptance of the settlement offer. Thus, I would say (based upon the thin facts presented) any right you may have had to seek quantum meruit for the additional work was extinguished when you accepted the check. See UCC § 3-311; Woolridge v. JFL Electric, Inc. 02 C.D.O.S. 2323 (Ca. Sup. Ct. App. Div. 2002) (summary of case near bottom of page).
Always discuss fees up front and then confirm that agreement in writing before the work is performed. If the fee agreement is oral, then send a confirmation letter containing the agreement to the client before starting work. If the client requests additional work or changes to the scope at a later date, agree on a price and, again, confirm in writing.
Submitted: 6-7-2005; Virginia, California
Response: 6-11-2005; JJR
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