Profiting at someone else’s expense, whether by mistake, fraudulently, illegally, or in bad faith constitutes unjust enrichment. Claims for unjust enrichment can exist, with or without a contract between two parties. Moreover, you can claim unjust enrichment and breach of contract in one lawsuit.
Examples of Unjust Enrichment
Here are a few everyday examples of unjust enrichment to help you if you’re still confused:
- After paying a contractor to install a new HVAC system, you discover they fitted some used units, profiting from you. You are entitled to recover the amount by which the contractor was “unjustly enriched” when the money paid did not go toward purchasing new appliances.
- If someone paints your house and you withhold part of the payment, the painter has grounds to institute an unjust enrichment claim. You have benefitted because the contractor has bought the materials and painted your home. Withholding payment may prove unfair.
- You paid for repairs to your vehicle that a mechanic failed to perform.
- You have paid someone to complete a job, for example, washing your dogs, but they partly completed the work and never returned to finish it.
- You refuse to pay a contractor after they have completed half the job. For example, they have laid carpets in three rooms but have two spaces left, and you decide to terminate the contract because of a breach.
- After accidentally giving someone money and they refuse to return it.
- You agreed to end the contract, but the other person keeps the money or assets.
- Someone provides you with services or goods without you ever entering a contract.
- You settled a debt at the other person’s request.
Circumstances for Unjust Enrichment
Therefore, unjust enrichment exists under the following elements:
- The defendant received a benefit
- The benefit was at the plaintiff’s expense
- It’s unjust for the defendant to retain the use without fair compensation to the plaintiff.
However, a plaintiff cannot bring an unjust enrichment claim when they give the defendant a gift and expect something in return.
Additionally, the plaintiff must have applied the choice principle when providing a benefit to the defendant. For example, if the plaintiff decided to paint the defendant’s house at night or while the defendant was away on holiday without an agreement, they could not seek a benefit for the service.
Therefore, the elements for unjust enrichment include a consideration, the transfer of money or property between the two parties, and the unjust factor, where a solid reason spoils the goal of their contract or agreement.
Compensation in Unjust Enrichment
If the court finds that one party was unjustly enriched, they must repay the other by returning the money or even a mistakenly taken item. The compensation is also called restitution.
Additionally, the court bases the compensation on the amount the plaintiff lost rather than the defendant’s gain. Finally, the value is determined when they come into ownership of the goods or property.
Famous Unjust Enrichment Cases
Here are a few famous examples of unjust enrichment cases:
Basic Research v. Rainbow Media Holdings
Rainbow Media Holdings, Inc owned and operated cable television networks. Meanwhile, Basic Research, LLC advertised its nutritional products on the networks owned by Rainbow through Icebox Advertising, Inc.
Icebox received the money from Basic for their advertising airtime, but Icebox didn’t make the payment transfers to Rainbow. However, Basic believed the payments were made to Rainbow in advance, whereas, Icebox had an agreement with Rainbow to pay 60 days after receiving invoicing from Rainbow.
Unfortunately, Icebox filed for bankruptcy. Rainbow recouped some of the money owed for Basic’s advertising campaign but sued Basic for unjust enrichment because of the outstanding amount. However, since Basic had paid Icebox, they believed they had paid everything.
The district court found that Basic was liable for the missing money. However, when the case went to appeal, the court ruled that the district court erred in its decision. Therefore, the 10th District U.S. Court of Appeals found that Rainbow’s evidence concerning how Icebox could purchase ads and how Basic benefitted was insufficient to constitute a ruling for Rainbow to receive payment.
City of Oakland v. Oakland Raiders
When the Raiders moved from Oakland to the city of Las Vegas, the City of Oakland sued the National Football League and its 32-member teams. The City claimed the defendants had not followed the correct process for club relocations specified in the NFL Constitution, leading to unjust enrichment, breach of contract, good faith, and fair dealing.
Without granting leave to amend, the court supported the defendants’ defense of each of the three causes of action and ruled in their favor. The second Appellate District upheld the decision because it could not claim that it was a third-party beneficiary of the documents, and the City could not prove unjust enrichment.
Dunkin v. Boskey
Dunkin v. Boskey is a case of an unmarried man and woman who had signed a contract promising to “‘produce a child via the use of artificial insemination” by a donor who remains unnamed. The parties agreed in the contract to care for it as if it was their natural child in all respects.
The couple cohabitated after the child’s birth, but the mother ended the connection with the father just before the child turned two. She refused to allow any contact between the father and the child. During their cohabitation, the father never adopted the child, nor did the couple get married.
The man sued for breach of contract, which the court in California dismissed because of insufficient grounds. However, after an appeal, the court reinstated the case.
The man could not change his complaint to include damages for emotional distress after the court determined to disallow public policy considerations. However, the court determined their ruling did not disallow him from recovering special damages for his economic loss under the unjust enrichment theory.
Final Take
As you can see, unjust enrichment cases can become very complex, especially without contracts or written agreements. Seek expert advice when you’re unsure about unjust enrichment to ensure you have all the elements required to ensure success.
FAQs
What is the difference between unjust enrichment and fraud?
Unjust enrichment generally refers to someone receiving a benefit without having paid for it or not having provided any service. Fraud, conversely, involves an intentional deception causing injury or financial loss to another person.
How do courts determine if a party has been unjustly enriched?
Courts look at various factors, including the parties’ intentions, motivations, and benefits received from any transaction, when making this determination. They also consider whether one of the parties has acted with undue influence or coercion.
Can I recover damages for emotional distress under an unjust enrichment claim?
Generally, no; however, you may be able to recover special damages for economic loss. It is important to consult an attorney for the best advice on proceeding with a claim for unjust enrichment.
