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Summaries and analysis of recent Delaware court decisions concerning business-related litigation.
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Superior Court Holds Measure of Damages in Quasi-Contract Action is Value of Services Provided, Not Benefit Received
This case sets forth the appropriate measure of damages under a quasi-contract theory (in this instance quantum meruit): the value of the services provided, not the value of the benefit received.
The plaintiff made a typical business loan to the defendant to be paid back with interest, but also agreed to provide additional services to help the defendant avoid foreclosure on other loans, reduce the businesses debt load, and restore profitability. In return for these services, the defendant offered the plaintiff a partnership interest in the business.
But when the business improved, the defendant allegedly stopped working with the plaintiff—and eventually sold the business for a profit.
The plaintiff argued that under a quantum meruit theory, he was entitled to recover the long-term value of the benefit he conferred on the business, which the defendant reaped in the sale. The defendant, however, argued that the measure of damages was not the benefit conferred on the business, but the value of the services provided to the business.
The court agreed with the defendant, holding that the measure of damages on a quasi-contract theory was the value of the services provided. In particular, under quantum meruit, the standard for measuring the value of the performance is the amount for which such services could have been purchased from one in the plaintiff’s position at the time and place the services were rendered. This fact could be established by expert opinion testimony as to the manner in which compensation is determined for the type of services provided by the plaintiff.