The Contract Nobody Signed

Quantum Meruit, Unjust Enrichment, and the Bid You Can’t Take Back

Courts enforce three kinds of obligations no one ever wrote down: contracts implied from conduct, “contracts” the law invents to stop unjust enrichment, and bids made irrevocable because someone relied on them. Together they decide who pays when the work got done and the paperwork didn’t.

By M. Colby Lewis, Construction Defect Attorney, The Law Offices of Colby Lewis, Houston, Texas

This is Post 7 in our Foundations Series. Post 6, Is a Letter of Intent Binding?, covered deals half-written. This post covers deals never written at all, and why courts enforce them anyway.

The short version

When work gets done without a contract, the law has three tools. An implied-in-fact contract is a real contract proven by conduct instead of words: you asked for the work, watched it happen, and knew the other side expected payment. An implied-in-law (quasi-) contract is not a contract at all but a fiction courts impose to prevent unjust enrichment, paying the reasonable value of a benefit conferred. And promissory estoppel makes certain promises, most famously a subcontractor’s bid, binding because someone relied on them. Two rules protect owners inside this doctrine: an express contract generally blocks these equitable end-runs around its terms, and a subcontractor usually cannot reach the owner directly without showing the owner requested the work and knew the sub expected the owner to pay. But the doctrines have teeth on both sides, and they surface in almost every failed project.

Two Kinds of Invisible Contracts

Start with a distinction courts themselves confuse. An implied-in-fact contract is a genuine contract: mutual assent existed, it just was expressed through conduct rather than words. The law treats it exactly like an express contract, because as one court put it, conduct “may often convey as clearly as words a promise or an assent to a proposed promise.” Sparks v. Rose, 681 S.W.3d 542 (Ky. Ct. App. 2023).

An implied-in-law contract, also called a quasi-contract, is different in kind. Nobody assented to anything. It is, in the Iowa courts’ refreshingly honest description, “a legal fiction arising from considerations of justice and the equitable principle of unjust enrichment … they are not real contracts.” K & L Landscape & Construction, Inc. v. Dakota Contractors, Inc., 695 N.W.2d 41 (Iowa Ct. App. 2004). The law simply orders one party to disgorge a benefit it would be unjust to keep, measured either by the reasonable value of the benefit (what it would have cost to buy elsewhere) or by the increase in the property’s value. Restatement (Second) of Contracts § 371. The recovery in both settings often goes by the Latin tag quantum meruit: “as much as he deserved.”

Why should an owner care about the taxonomy? Because the two doctrines have different elements, different defenses, and different measures of recovery, and in a failed-project fight, somebody will be pleading both against you, or you will be pleading both against them.

When Conduct Builds a Contract

The recipe for an implied-in-fact contract is consistent across jurisdictions: services performed with the recipient’s knowledge, under circumstances telling the recipient they were not a gift, and acceptance of the benefit with reason to know payment was expected. Courts have inferred assent from a contractor’s mobilization and control of the site, from an owner allowing work to proceed knowing the contractor expected pay, and from partial payments against invoices.

The boundaries matter as much as the rule. Silence alone is not acceptance unless you took the benefit knowing it came with a price tag. Restatement (Second) of Contracts § 69. And work you never authorized creates no implied contract at all; courts have rejected claims where nobody with authority requested the work.

The classic construction case shows the doctrine’s natural habitat: the deal that dies before signing. An owner invited a contractor to work up constructability reviews, surveys, and federal financing submissions on the understanding that the contractor would get the construction contract if financing came through. Financing came through; the contract negotiations collapsed; the owner hired someone else. The contractor recovered the reasonable value of the benefit it had conferred, because “something in the nature of an implied contract results where one renders services at the request of another with the expectation of pay.” Hill v. Waxberg, 237 F.2d 936 (9th Cir. 1956). Sound familiar? It is Post 6’s almost-contract, wearing its remedial costume.

IN PLAIN ENGLISH, FROM COLBY

Here’s the test I want you to carry around, and it’s just three questions. Did you ask for it? Did you watch it happen? Did you know they expected to get paid? If the answer to all three is yes, you may have bought it, contract or no contract. That’s really the whole doctrine. And notice what it means practically: on your project, every person on your team with the power to say “yeah, go ahead and take care of that” is a person with the power to create a contract you never saw. The fix isn’t complicated. Decide who can authorize work, put it in writing, tell the contractor that nobody else’s word counts, and then, this is the hard part, actually live by it when the project gets busy and somebody just wants the thing handled.

The Iron Rule: An Express Contract Blocks the Back Door

Now the rule that does more work than any other in this corner of the law: where an express contract covers the dispute, the equitable theories are shut out. Restitution is “subordinate to contract as an organizing principle,” and the terms of an enforceable agreement “normally displace any claim of unjust enrichment within their reach.” Restatement (Third) of Restitution and Unjust Enrichment § 2, cmt. c. Courts across the country dismiss quantum meruit and unjust enrichment claims for work performed under a written contract, including claims for “extra” work that falls within the contract’s general scope.

For owners, this rule is a shield. A contractor unhappy with its contract price cannot re-price the job through equity; the deal is the deal. Texas applies the rule with a narrow, fact-bound exception: a San Antonio court recognized that quantum meruit can reach change-order work clearly outside the contract’s scope, but denied the claim because the contractor could not clearly prove the work was outside the general scope. Edifika Investments, LLC v. Chain & Chain Construction, LLC, 2023 WL 3487027 (Tex. App.—San Antonio 2023). The burden sits where it should: on the party trying to escape the contract.

But the shield has honest limits, and one recent case shows equity’s reach. A design-build contractor completed a fiber-optic network but submitted false certifications that its subs had been paid; the trial court threw out its claims entirely for “unclean hands.” The Supreme Judicial Court of Massachusetts reversed: good faith is judged on “the contract as a whole,” weighing the intentional breaches against the value of allegedly $10 million in uncompensated work and whether the owner would reap a windfall, because equity’s job is “to accomplish a just result.” G4S Technology LLC v. Massachusetts Technology Park Corp., 99 N.E.3d 728 (Mass. 2018). Translation: even a contractor who behaved badly may still recover the value of real work, and even a wronged owner should not count on keeping a completed building for free.

Can a Subcontractor Make Me Pay Twice?

This is the owner’s recurring nightmare: you paid your general contractor in full, the general never paid a subcontractor, and now the unpaid sub is looking at you. On the implied contract theories, the law mostly protects you. Courts dismiss subcontractor quantum meruit claims against owners where the owner never directly requested the sub’s work and did not know the sub expected the owner to pay; the sub’s expectation of payment ran to the general contractor. One court dismissed exactly such a claim and pointed the sub to its real remedy: the mechanic’s lien statute. Reicher Electric, Inc. v. Patel, 928 N.W.2d 694 (Iowa Ct. App. 2019). Another dismissed because the owner “had not made a direct specific request” for the work. G&Y Maintenance Corp. v. 540 West 48th St. Corp. (N.Y. Sup. Ct. 2021).

But the protection has trapdoors. Where the general acted as the owner’s agent in hiring the sub, the owner has been held directly liable in quantum meruit. Almat Builders & Remodeling, Inc. v. Midwest Lodging, LLC, 615 S.W.3d 70 (Mo. Ct. App. 2020). Where an owner steps in after a contractor default and asks the subs to finish, the owner makes a new implied deal of its own. Mike Glynn & Co. v. Hy-Brasil Restaurants, Inc., 914 N.E.2d 103 (Mass. App. Ct. 2009). And joint-check arrangements create their own duties: a contractor that signed a joint check agreement for a sub’s supplier and then failed to honor it ate a $252,000 unjust enrichment judgment. James G. Davis Construction Corp. v. FTJ, Inc., 841 S.E.2d 642 (Va. 2020). The common thread: the moment you step out of your lane and start dealing directly with the lower tiers, you may be volunteering to be their debtor.

IN PLAIN ENGLISH, FROM COLBY

When a general contractor goes sideways mid-project, every owner has the same instinct: call the subs directly, keep the job moving. I understand it. But listen to what you just read, because those cases are the price tag on that instinct. The sub who can’t reach you today, because you never hired him and he never expected your money, can absolutely reach you tomorrow, the minute you start directing his work and promising he’ll be taken care of. Sometimes that’s still the right business call! Finishing the building matters. But make it a decision, not an accident. If you’re going to engage the subs after a default, do it with a written agreement that says exactly what you’re paying for, going forward only. And remember the sub’s real remedy against you is the lien statute, which has its own clock and its own rules, and that’s a Texas-specific minefield we’ll walk in a future post.

Promissory Estoppel: The Bid You Can’t Take Back

The third invisible obligation is the most famous in construction law. Here is the problem, as the contracts scholar Allan Farnsworth framed it: a general contractor builds its bid to the owner on the subcontractors’ quotes, wins the job, and then a sub tries to yank its bid, because costs rose, a better job appeared, or it made a math error. The general is locked to the owner by the firm bid rule but has no signed subcontract to hold the sub.

Justice Roger Traynor’s answer became the law almost everywhere: the sub’s bid is a promise the sub should reasonably expect the general to rely on, the general did rely, and injustice can be avoided only by enforcement. Drennan v. Star Paving Co., 333 P.2d 757 (Cal. 1958). The Restatement codified it, Restatement (Second) of Contracts §§ 87(2), 90(1), and the remedy is precise: the difference between the withdrawn bid and the replacement cost. Even oral sub-bids are enforced this way, statute of frauds notwithstanding.

Notice the asymmetry, though: the doctrine binds the sub without binding the general, who remains free to shop the sub’s number, a one-way street academics have complained about for decades. And there are escape hatches. A Texas court let a supplier withdraw a bid containing a $100,000 typographical error, holding promissory estoppel does not bar relief for that kind of mistake. B.D. Holt Co. v. OCE, Inc., 971 S.W.2d 618 (Tex. App.—San Antonio 1998). Reliance on a bid “too good to be true” is not reasonable. Rushlight Automatic Sprinkler Co. v. City of Portland, 219 P.2d 732 (Or. 1950). And a general who tries to renegotiate, sending the sub a contract with material new terms like a no-damage-for-delay clause, constructively rejects the bid and loses the estoppel. Hawkins Construction Co. v. Reiman Corp., 511 N.W.2d 113 (Neb. 1994). Reliance protects the deal that was bid, not a better one.

What This Means for a Texas Building Owner

Three takeaways to keep. First, control authorization. Implied contracts are built out of “go ahead” moments; limit who can create them and paper the ones you create, because three questions, did you ask, did you know, did you watch, can add up to a purchase.

Second, use the iron rule. Your express contract is your shield against equitable re-pricing, so when a contractor’s claim dresses contract work up as “extras” or unjust enrichment, the displacement doctrine and the Edifika burden of proof are your friends. Conversely, do not expect equity to let you keep a substantially completed building without paying the reasonable value of honest work.

Third, treat a contractor default as a legal event, not just a scheduling problem. The days right after a default, when owners start calling subs, promising payments, and keeping trades on site, are precisely when new implied obligations and direct liabilities get created. Get counsel involved before those calls, not after. Sorting express contracts from implied ones is often the first fight in a defect or termination case, and it is what we do for building owners across Texas. Our Construction Defects FAQ covers the practical first steps.

Key Takeaways

• Implied-in-fact contracts are real contracts proven by conduct: work requested, performed with the recipient’s knowledge, and accepted with reason to know payment was expected. They carry the same legal force as written contracts.
• Implied-in-law (quasi-) contracts are legal fictions imposed to prevent unjust enrichment, paying the reasonable value of a benefit conferred (Restatement § 371), no assent required.
• An express contract generally displaces quantum meruit and unjust enrichment claims within its scope. In Texas, extras support quantum meruit only if clearly outside the contract’s general scope, and the claimant bears that burden (Edifika, Tex. App. 2023).
• Even a breaching contractor may recover the value of completed work; good faith is judged on the whole contract, and courts will not hand owners a windfall (G4S Technology, Mass. 2018).
• Unpaid subcontractors generally cannot recover from owners in quantum meruit absent a direct request and expectation of owner payment; their remedy is the lien statute. But owners who deal directly with subs after a default can create new, direct liability.
• Under Drennan and Restatement §§ 87(2) and 90, a subcontractor’s bid is irrevocable once the general relies on it, with escape hatches for clerical mistakes (B.D. Holt, Tex. App. 1998), unreasonable reliance, and post-bid renegotiation.

Frequently Asked Questions

What is quantum meruit in construction?

Quantum meruit (“as much as he deserved”) is a recovery of the reasonable value of work performed, awarded either under a contract implied from the parties’ conduct or as restitution to prevent unjust enrichment where no contract exists. It is the standard theory for recovering the value of construction work performed outside, or in the absence of, an express contract.

Can someone recover payment from me without a signed contract?

Yes, in defined circumstances: if you requested or knowingly accepted work understanding the other party expected payment (implied-in-fact contract), or if you received a benefit it would be unjust to keep (unjust enrichment). Unauthorized work you never requested and silence without knowledge generally do not create liability.

Can an unpaid subcontractor sue the property owner directly?

Usually not in quantum meruit, if the owner never requested the sub’s work and the sub expected payment from the general contractor; the sub’s remedy against the property is typically a mechanic’s lien claim, with its own strict deadlines. Direct owner liability can arise where the general acted as the owner’s agent or the owner dealt directly with the sub, especially after a contractor default.

What is the Drennan rule?

The rule, from Drennan v. Star Paving Co. (Cal. 1958) and adopted nearly everywhere, that a subcontractor’s bid becomes irrevocable once the general contractor reasonably relies on it in submitting its own bid. The general can recover the difference between the withdrawn bid and the replacement cost. Exceptions exist for known mistakes, bids too good to be true, and generals who try to renegotiate the bid’s terms.

If my contractor breached, do I still have to pay for the work?

Often yes, for the value of work properly performed. Courts weigh breaches in the context of the whole contract and will not let an owner keep a substantially completed project without paying for it. Your damages for the breach offset what is owed, which is why careful documentation of defects and costs matters from day one.

Coming Next: The Foundations Series Finale

We have now traced the contract from promise to formation to the deals nobody signed. The finale takes the last step back and looks at the whole board: how modern construction projects are actually organized. Design-bid-build, construction management, design-build, public-private partnerships, and the collaborative models trying to rebuild the master builder, plus how owners select their builders in the first place. It is the post that connects the series’ first story, the master builder of antiquity, to the way your next project will be delivered, and it closes the Foundations Series where it began: with the question of who answers for the work.

The full series lives in our Knowledge Center.

About the Author

2026. Colby Lewis is a seventh-generation Texan, trial lawyer, and the founder of The Law Offices of Colby Lewis, with offices in Houston, San Antonio, Corpus Christi, McAllen, and Brownsville. Over a two-decade career he has recovered more than $200 million for his clients, including public entities such as Harris County, the Houston Community College system, and dozens of Texas school districts and cities in construction defect and insurance matters. He is AV Preeminent rated by Martindale-Hubbell, has been named a Texas Super Lawyer every year from 2016 through 2026, and was named to the Top 100 Houston Super Lawyers list for 2025 and 2026. He represents building owners, not builders, in construction defect litigation across Texas. Meet Colby, or call (866) 265-2948.

Sources and Authorities

• Restatement (Second) of Contracts §§ 4, 19, 69, 87(2), 90(1), 370-371 (1981); Restatement (Third) of Restitution and Unjust Enrichment §§ 1-2, 25 (2011)
• Hill v. Waxberg, 237 F.2d 936 (9th Cir. 1956)
• Drennan v. Star Paving Co., 333 P.2d 757 (Cal. 1958)
• G4S Technology LLC v. Massachusetts Technology Park Corp., 99 N.E.3d 728 (Mass. 2018)
• Edifika Investments, LLC v. Chain & Chain Construction, LLC, 2023 WL 3487027 (Tex. App.—San Antonio 2023); B.D. Holt Co. v. OCE, Inc., 971 S.W.2d 618 (Tex. App.—San Antonio 1998)
• K & L Landscape & Construction, Inc. v. Dakota Contractors, Inc., 695 N.W.2d 41 (Iowa Ct. App. 2004); Sparks v. Rose, 681 S.W.3d 542 (Ky. Ct. App. 2023)
• Reicher Electric, Inc. v. Patel, 928 N.W.2d 694 (Iowa Ct. App. 2019); G&Y Maintenance Corp. v. 540 West 48th St. Corp. (N.Y. Sup. Ct. 2021); Almat Builders & Remodeling, Inc. v. Midwest Lodging, LLC, 615 S.W.3d 70 (Mo. Ct. App. 2020); Mike Glynn & Co. v. Hy-Brasil Restaurants, Inc., 914 N.E.2d 103 (Mass. App. Ct. 2009)
• James G. Davis Construction Corp. v. FTJ, Inc., 841 S.E.2d 642 (Va. 2020); Restore Construction Co. v. Board of Education of Proviso Township High Schools District 209, 164 N.E.3d 1238 (Ill. 2020)
• Rushlight Automatic Sprinkler Co. v. City of Portland, 219 P.2d 732 (Or. 1950); Hawkins Construction Co. v. Reiman Corp., 511 N.W.2d 113 (Neb. 1994); Janke Construction Co. v. Vulcan Materials Co., 527 F.2d 772 (7th Cir. 1976)
• Farnsworth on Contracts §§ 3.10, 3.14, 3.25 (2d ed. 1998)

This article is for general information only and is not legal advice. Reading it does not create an attorney-client relationship. Whether an implied contract, restitution claim, or estoppel theory applies depends on your facts and current Texas law; consult a licensed Texas attorney about your specific situation. Attorney M. Colby Lewis is responsible for the content of this page. Principal office: Houston, Texas.