Can a Supplier Demand Payment Without Prior Price Agreement?

Question from Sam, Can a Supplier Demand Payment Without Prior Price Agreement?

Answer from AI:

Understanding the Scenario

In the UK, when a supplier provides a service without a prior agreement on the price, it can lead to a dispute over payment. The question is whether the supplier can demand payment for the service provided under such circumstances.

Legal Principles

The legal principles governing this scenario are primarily found in the laws of contract and unjust enrichment.

• Contract law – A contract normally requires agreement on essential terms, including price. If no price was agreed beforehand, it may appear that no contract exists, but the law supplies mechanisms to determine a price.
• Unjust enrichment – This principle prevents one party from being unfairly enriched at another’s expense. If a supplier provides a service and the recipient benefits, the law may imply a contract (or a quasi‑contract) to ensure fair payment.

Implied Terms and Quantum Meruit

UK law allows a court to imply a term that the supplier is entitled to a reasonable price for the services provided. This is known as quantum meruit (“as much as he has deserved”). The supplier can therefore claim payment for the value of the work performed, even though the price was not fixed in advance.

Relevant Legislation

The Supply of Goods and Services Act 1982 is the key statute. Section 8 implies that, where no price is agreed, the supplier is entitled to a reasonable charge for the services supplied. This statutory provision supports a quantum meruit claim.

Conditions for a Successful Claim

For a supplier to demand payment after providing a service without a pre‑agreed price, the following must generally be shown:

1. Consent or request – The service was provided at the request of, or with the consent of, the recipient.
2. Implied contract – The circumstances indicate that a contract (or quasi‑contract) existed despite the lack of an express price term.
3. Reasonable charge – The amount claimed is a reasonable price for the work performed, assessed by the market rate or the value of the benefit received.

Practical Steps for Suppliers

• Keep detailed records of the work (dates, hours, description of tasks).
• Document any communications that show the recipient requested or accepted the service.
• Attempt to negotiate a price before or after the work, and keep evidence of those negotiations.
• If the recipient refuses to pay, consider sending a formal demand letter outlining the quantum meruit basis for the claim.

When Legal Advice Is Needed

While the principles above give a general framework, each case can involve specific facts that affect the outcome (e.g., whether the recipient expressly rejected payment, the nature of the service, or any prior dealings). Consulting a solicitor experienced in contract law is advisable to assess the strength of a claim and to navigate any potential litigation.

Further Resources

• The full text of the Supply of Goods and Services Act 1982 is available on legislation.gov.uk.
• General guidance on contracts and quantum meruit can be found on the UK Government’s business contracts page.