Facts
- A landowner engaged a building contractor to construct a Turkish bathhouse on the owner’s Boston land.
- Contract documents were prepared by an architect who fraudulently arranged that the parties executed instruments appearing to be duplicates but stating materially different total prices.
- The contractor’s copy stated a total price of about $33,500; the owner’s copy stated a total price of about $23,000.
- Both parties acted honestly and believed they had formed a single valid written contract; the architect managed payments and concealed the discrepancy until the work was largely completed.
- The owner paid approximately $23,000, consistent with the price term in his copy, leaving the contractor claiming an unpaid balance of about $10,500.
- An auditor found the fair market value of the labor and materials furnished was about $33,499, the contractor’s cost was about $32,950, and the improvement increased the owner’s property value by only about $22,000.
- The trial court entered judgment for the owner; the contractor sought review on questions of law.
Issues
- Whether an enforceable express contract existed when each party signed a writing with a materially different price term due to a third party’s fraud.
- If no express contract existed, whether the contractor could recover in quantum meruit for the fair market value of labor and materials furnished at the owner’s request, notwithstanding that the owner had paid what he believed was the agreed price and the property’s value increased by less than the value of performance.
Decision
- The court held no enforceable express contract was formed because there was no meeting of the minds on the essential term of price.
- The court held the contractor could recover on quantum meruit for the fair market value of the labor and materials furnished at the owner’s request.
- Recovery was not capped by the increase in the owner’s property value; sums already paid by the owner were to be credited.
- The contractor’s exceptions were sustained.
Legal Principles
- A contract does not arise where, through honest mutual mistake induced by a third party’s fraud, the parties’ writings differ on an essential term such that their assent does not coincide.
- When a party, at another’s request, furnishes labor and materials under a transaction that fails as an express contract, the law implies an obligation to pay the reasonable (fair market) value of the performance.
- In this setting, restitution is measured by the value of labor and materials furnished, not by the recipient’s property-value increase, and payments made must be deducted from the amount awarded.
Conclusion
Because the parties never agreed on a single price term, no express contract existed, but the owner’s request for the work supported quantum meruit recovery for the fair market value of the contractor’s labor and materials, less amounts already paid, regardless of the smaller increase in the property’s value.