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Unjust Enrichment

From lawbrain.com

A general equitable principle that no person should be allowed to profit at another's expense without making restitution for the reasonable value of any property, services, or other benefits that have been unfairly received and retained.

Although the unjust enrichment doctrine is sometimes referred to as a quasi-contractual remedy, unjust enrichment is not based on an express contract. Instead, litigants normally resort to the remedy of unjust enrichment when they have no written or verbal contract to support their claim for relief. In such instances litigants ask a court to find a contractual relationship that is implied in law, a fictitious relationship created by courts to do justice in a particular case.

Unjust enrichment has three elements. First, the plaintiff must have provided the defendant with something of value while expecting compensation in return. Second, the defendant must have acknowledged, accepted, and benefited from whatever the plaintiff provided. Third, the plaintiff must show that it would be inequitable or unconscionable for the defendant to enjoy the benefit of the plaintiff's actions without paying for it. A court will closely examine the facts of each case before awarding this remedy and will deny claims for unjust enrichment that frustrate public policy or violate the law.

In some circumstances unjust enrichment is the appropriate remedy when a formally executed agreement has been ruled unenforceable due to incapacity, mistake, impossibility of performance, or the statute of frauds. In certain states, for example, contracts with minors are voidable at the minor's discretion because persons under the age of majority are deemed legally incapable of entering into contracts. But if the minor has received a benefit from the other party's performance before nullifying the contract, the law of unjust enrichment will require the minor to pay for the fair market value of the benefit received. If the adult used duress or undue influence to induce the minor to enter the contract, however, the court will deny recovery in unjust enrichment because the adult lacked "clean hands."

In other circumstances unjust enrichment is the appropriate remedy for parties who have entered a legally enforceable contract, but where performance by one party exceeds the precise requirements of the agreement. For example, suppose a homeowner and a builder have entered into a legally binding contract under which the builder is to construct a two-car garage. One day the owner returns to her residence and discovers that in addition to constructing a two-car garage, the builder has paved the driveway. The owner says nothing about the driveway but later refuses to compensate the builder for the paving job. The builder has a claim for unjust enrichment in an amount representing the reasonable value of the labor and materials used in paving the driveway.

Suppose, instead, that after completing half the job, the builder tells the owner that he cannot finish the garage as originally agreed, but that he wants to be paid for the work he has done. The owner balks at this demand, arguing that the builder has breached his contractual obligations and is entitled to nothing. A minority of jurisdictions would allow the builder to recover the reasonable value of his services, minus any damages suffered by the owner as a result of the breach. A majority of jurisdictions, however, adhere to the rule that a party who fails to perform contractual obligations has no remedy regardless of the amount of hardship he might endure.

The doctrine of unjust enrichment also governs many situations where the litigants have no contractual relationship. For example, the law finds an implied promise to pay for emergency medical treatment that is neither requested nor consented to by a patient. In some jurisdictions the law finds an implied promise to pay for life-saving medical treatment even when a patient objects to receiving it. The law also requires parents to reimburse a person who voluntarily supplies necessaries such as food, shelter, and clothing to their children. As these examples demonstrate, unjust enrichment is a flexible remedy that allows courts great latitude in shifting the gains and losses between the parties as equity, fairness, and justice dictate.

Further Readings

Calamari, John D., and Joseph M. Perillo. 1999. Contracts. 3d ed. St. Paul, Minn.: West.

Dagan, Hanoch. 1997. Unjust Enrichment: A Study of Private Law and Public Values. New York: Cambridge Univ. Press.

Hurd, Heidi M. 2003. "Nonreciprocal Risk Imposition, Unjust Enrichment, and the Foundations of Tort Law: A Critical Celebration of George Fletcher's Theory of Tort Law." Notre Dame Law Review 78 (April).

Restatement of the Law, Restitution and Unjust Enrichment: Tentative Draft. 2001. Philadelphia, Pa.: Executive Office, American Law Institute.

Smith, Stephen A. 2003. "The Structure of Unjust Enrichment Law: Is Restitution a Right or a Remedy." Loyola of Los Angeles Law Review 36 (winter).



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