Last Updated on 09/03/2026 by Damin Murdock
In the fast-paced environment of a construction site, variations often happen on the fly. For builders and contractors, the “gold standard” is a written variation signed by all parties. But what happens when the work is completed based only on a verbal agreement?
While a builder may be unable to claim the costs under the contract due to a lack of formal writing, the law provides a secondary path: Quantum Meruit.
What is Quantum Meruit?
Quantum meruit (Latin for “as much as he has deserved”) is a legal action for the payment of the reasonable value of services performed. It is an equitable remedy designed to prevent “unjust enrichment”—situations where a homeowner enjoys the benefit of extra work without compensating the builder.
Case Analysis: Darin v Olzomer [2012] NSWCA 60
The NSW Court of Appeal recently clarified the strict requirements for a successful quantum meruit claim in the context of residential building variations.
The Dispute: In Darin v Olzomer, the homeowners approved a major change to the plans, moving from a single-storey dwelling to a “split-level” building. The builder verbally advised that this variation would cost at least $50,000. However, no written contract or formal variation document was ever signed. Upon completion, the builder sought to recover the final payment for this extra work.
The Judicial Reasoning: The Court held that the builder was entitled to recover the costs outside of the contract. The decision rested on three critical findings of “applied judgment”:
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Actual Knowledge: The homeowners were fully aware that additional work was being performed.
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Extra-Contractual Nature: The homeowners knew this work sat outside the original fixed-price agreement.
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Expectation of Payment: The homeowners were aware the builder expected to be paid for these “extras.”
The Risk of Relying on Equity
While the builder in Darin v Olzomer was successful, relying on quantum meruit is a high-risk strategy.
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The “Reasonable Value” Trap: Unlike a contract where the price is fixed, quantum meruit only entitles you to a “reasonable” amount. This often requires expensive expert evidence to prove the market value of the labor and materials, which may be less than what you intended to charge.
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Evidentiary Burden: You must prove the owner knew you expected payment. If an owner can argue they thought the work was a “rectification” of an original error or a “freebie” to maintain goodwill, your claim may fail.
Applied Lessons for Builders and Contractors
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The Paper Trail: Always attempt to get a variation in writing, even if it is a simple email or text message confirmation. This significantly reduces the legal cost of proving “knowledge” later.
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The “Notice of Cost”: If you must proceed with urgent verbal work, provide a written estimate of the extra cost immediately. This satisfies the court’s requirement that the owner knew the work was not free.
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Statutory Restrictions: Be mindful that in some jurisdictions, statutory regimes (like the Home Building Act) may limit the ability to claim quantum meruit if certain mandatory contract formalities are ignored.
How Leo Lawyers Can Help
Recovering the costs of unwritten variations is one of the most common flashpoints in construction litigation. At Leo Lawyers, we provide the legal expertise to assess whether your “handshake deal” meets the high evidentiary bar for a quantum meruit claim.
Feel free to contact Damin Murdock at Leo Lawyers via our website, on (02) 8201 0051 or at office@leolawyers.com.au. Further, if you liked this article, please subscribe to our newsletter via our Website, and subscribe to our YouTube, LinkedIn, Facebook and Instagram. If you liked this article or video, please also give us a favourable Google Review.
DISCLAIMER: This is not legal advice and is general information only. You should not rely upon the information contained in this article, and if you require specific legal advice, please contact us.
Damin Murdock (J.D | LL.M | BACS - Finance) is a seasoned commercial lawyer with over 17 years of experience, recognised as a trusted legal advisor and courtroom advocate who has built a formidable reputation for delivering strategic legal solutions across corporate, commercial, construction, and technology law. He has held senior leadership positions, including director of a national Australian law firm, principal lawyer of MurdockCheng Legal Practice, and Chief Legal Officer of Lawpath, Australia's largest legal technology platform. Throughout his career, Damin has personally advised more than 2,000 startups and SMEs, earning over 300 five-star reviews from satisfied clients who value his clear communication, commercial pragmatism, and in-depth legal knowledge. As an established legal thought leader, he has hosted over 100 webinars and legal videos that have attracted tens of thousands of views, reinforcing his trusted authority in both legal and business communities."
