What is unjust enrichment?
What are the elements to prove in court?
How do you defend against such actions?
We will look at what is unjust enrichment, what is its meaning and definition, what are its elements, what type of restitution claims are possible, the statute of limitations, what are the possible causes of action, examples and more!
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What is unjust enrichment
So what constitutes unjust enrichment?
Unjust enrichment in law is when one party receives a benefit or performance from another party without providing restitution or reciprocal benefit or consideration.
In other words, a person or entity is enriched at the expense of another by not restituting something or by not performing an obligation.
The concept of unfair enrichment goes back to the Roman Law where the maxim that “nobody can benefit at another’s expense” is recorded in history.
The unjust enrichment doctrine is generally used when the plaintiff and the defendant do not have an express contract governing their relationship.
In essence, a plaintiff’s legal action is primarily driven in equity and equitable relief where the plaintiff seeks relief for an outcome that is evidently unfair and unjust.
There is a difference between unjustified enrichment and the act of giving a gift.
When you give a gift to someone, your expectation is that the other person receives the benefit without reciprocating or providing anything in return.
However, in the case of unjustified enrichment, when a party rendered a service or gave a benefit to another, the expectation was not to give something as a gift.
Instead, the party giving something, performing an action or obligating himself or herself to something expected to receive something in return.
Unjust enrichment definition
How do you define unjust enrichment?
According to Cornell Law School’s Legal Information Institute, unjust enrichment is defined as:
Unjust enrichment occurs when Party A confers a benefit upon Party B without Party A receiving the proper restitution required by law. This typically occurs in a contractual agreement when Party A fulfills his/her part of the agreement and Party B does not fulfill his/her part of the agreement.
As it clearly appears from this definition of illegal enrichment, when a party benefits from something without justification, that party will be legally required to restitute the benefits received further to an unjust enrichment recourse.
Elements of unjust enrichment
What are the elements to prove an unjust enrichment case?
How do you prove unjust enrichment?
For a person to have an unjust enrichment cause of action, there must be several elements to be proven in court:
- Enrichment of the defendant
- Impoverishment of the plaintiff
- Causality between enrichment and impoverishment
- Absence of justification
- Absence of remedy in law
When the court considers that the plaintiff gave a service, a good, something of value or benefit to the defendant at his or her expense and that it is unfair for the defendant to retain the good or merely benefit from the service without compensating the plaintiff, a claim for unjust enrichment can succeed.
Unjust enrichment claims are particularly used in family law cases such as in divorce proceedings.
A claim for unjust enrichment in family law will typically have the same foundation, such as:
- Did a spouse receive a benefit from another
- Was the spouse giving the benefit impoverished
- It would be inequitable, unconscionable and unjust that the spouse giving the benefit does not get a commensurate compensation
Restitution claims
When the law considers that an act or transaction resulted in undue enrichment, the legal remedy is for the party who received a benefit or something to restitute the same.
This is referred to as restitutionary remedies or restitution claims.
Typically, restitutionary claims are appropriate in cases where tortious wrongs were committed such as:
- Breach of contract
- Breach of fiduciary duty
- Equitable wrong
- Breach of statutory duty
The law of restitution, being a gain-based recovery, is closely used with the unjust enrichment doctrine as a means to compensate those who have suffered impoverishment at the expense of another.
Typically, the courts will provide a personal or proprietary remedy as the proper means to compensate a victim of unlawful enrichment.
A personal remedy is a monetary award where the defendant is asked to return or reimburse the plaintiff’s money.
A proprietary remedy is related to a specific property.
For instance, the court can declare the plaintiff with proprietary rights or interests in property owned or acquired by the defendant.
Depending on the jurisdiction where the unfair enrichment lawsuit is filed, proprietary remedies may be awarded or not.
Other remedies
Certain specific remedies may be possible in certain unlawful enrichment cases such as quantum meriut claims or quantum valebat claims.
A quantum meriut claim is a type of claim that may be appropriate when the enrichment resulted from services rendered by the plaintiff to the defendant.
A quantum valebat claim is a type of claim that may be more appropriate when the enrichment resulted in the delivery of a good or product by the plaintiff to the defendant.
These type of remedies may be possible in the following scenarios:
- No contract existed between the parties
- A contract existed but the services or goods were delivered outside of the scope of the contract
- A contract had come to an end when the service rendered or product delivered
- A contract was frustrated
- A contract was terminated on the basis of contractual breach
Unjust enrichment statute of limitations
A statute of limitations is the legal time period a plaintiff has to assert a legal action against the defendant.
When a person’s claim is filed after the statute of limitations has elapsed, the claim is said to be “time-barred”.
An unjust enrichment claim may be subject to varying time periods depending on the jurisdiction in question.
For example, in New York, in the case Vandashield LTD v. Isaccson in 2015, the court concluded that the statute of limitations for unjust enrichment pleaded as an alternative to tort must follow the statute of limitations for the underlying tort.
In the case in point, since the underlying tort was the breach of fiduciary duty, the court concluded that unjust enrichment for breach of fiduciary duty will have a six-year statute of limitations time period.
In other jurisdictions, the statute of limitations is three years.
However, this must be validated by a lawyer or attorney in your jurisdiction for proper validation as the time periods vary.
Unjust enrichment defenses
What are the defenses possible against an action for unjust enrichment?
Many possible defenses may be asserted depending on the specific nature of the unjust enrichment claim, such as:
- The plaintiff intended to make a gift
- There was a contract between the parties justifying the enrichment
- There are other legal remedies possible
- There was a change of position
- There are grounds for estoppel
- Laches and acquiescence
- Limitation periods have lapsed
- The impossibility of counter-restitution
- The plaintiff does not have “clean hands”
- There was a set-off
- The plaintiff was given a “fair share” of something received before
- The plaintiff did not get impoverished
- There is no connection between the alleged enrichment and impoverishment
Unjust enrichment examples
There are many types of claims for unjust enrichment to compensate for scenarios where a person believes that another was unjustly enriched at their expense.
For example:
- A person pays another by mistake
- A person discharges another’s debt under pressure
- A person provides a service without commensurate compensation
- A person delivers a good without contract or compensation
- An agreement is modified by the other keeps the asset or money
Imagine that Suzanne orders pizza for delivery.
She calls a restaurant, places an order and pays with her credit card.
However, the pizza delivery goes to the neighbour who is pleasantly surprised to receive a pizza knowing that he did not order it.
The neighbour does not say anything to the delivery person about the mistake and happily eats the pizza.
Legally speaking, Suzanne will have an unjustified enrichment claim against her neighbour.
The unlawful enrichment elements she will prove in court are as follows:
- The defendant was unjustly enriched by receiving the pizza
- She was impoverished as she paid for the pizza but did not receive it
- The defendant’s enrichment is directly linked to her impoverishment
- The defendant did not have any valid reason to accept the pizza
- There are no other remedies in law such as contractual remedies or other
Takeaways
Is unjust enrichment a legal or equitable claim?
Unjust enrichment is a civil claim whereby the plaintiff alleges that the defendant was enriched at his or her expenses, without justification and without proper compensation.
Generally, the parties to an unjust enrichment action did not have direct contractual ties and no other adequate remedy is possible.
Although the courts refer to quasi contracts or quasi contractual relationships in certain cases, claims for unfair competition are not contractual claims.
To successful win an unjust enrichment lawsuit, you will typically need to prove the following elements:
- Enrichment of the defendant
- Impoverishment of the plaintiff
- Causality between enrichment and impoverishment
- Absence of justification
- Absence of remedy in law
These types of cases are highly factual in nature and complex.
It may be worth consulting with an unjust enrichment lawyer in your jurisdiction to understand the specific nature of the claim that you can assert.
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