Unjust enrichment cases involve one party that benefits either accidentally or by error at the other party's expense.

Unjust Enrichment Definition

Unjust enrichment occurs when one party benefits at the other party's expense. The law considers this act unjust, no matter if the situation occurs accidentally or in error. Those who benefit from unjust enrichment must pay the other party restitution.

On occasion, unjust enrichment claims go to court. These cases typically involve disputed contracts due to a long-standing legal principle. This principle states that a party cannot obtain restitution for unjust enrichment unless they cannot enforce the contract. In cases that involve rescinding a written contract or allegation of fraud, unjust enrichment might be the only way for one party to recover the goods or funds.

Unjust Enrichment Elements

Before you can file an unjust enrichment claim, there are two elements that must exist in order to proceed.

  • Consideration. There must be some form of payment or transfer of property between the defendant and claimant.
  • Unjust Factor. There must be a solid reason that spoiled the claimant's goal of doing business with the defendant.

Restitution or Compensation in Unjust Enrichment

If the unjustly enriched party benefited from a form of payment, that party must pay it back to the other. This is known as restitution. Restitution might also include a requirement that the enriched party returns a specific item mistakenly taken.

For example, if an unjustly enriched party still has a vehicle that was brought in for repairs, the party might have to pay back for services not performed in addition to returning the vehicle.

Other examples of unjust enrichment cases involving restitution include:

  • One party gives money to the other on accident.
  • Both parties agree to end a contract, but the other party remains in possession of money or assets.
  • One party provides goods or services to the other even though the two parties never entered into a contract.
  • One party settles a debt at the other party's request.

Compensation involves an amount based upon how much the claimant lost, not on how much the enriched party gained. The enriched party might pay the other for the property's value when it came into ownership.

For instance, imagine if two parents both worked full-time and decided that their teenaged child was responsible for doing a majority of the upkeep of the house. That included chores, meal preparation, and caring for younger siblings. This agreement was in place for several years with the understanding that the parents would leave their entire estate to the teenager.

Several decades later, the parents and child had a falling out. Due to their anger, the parents transferred their assets into a trust, leaving the oldest child out of the entire estate. The oldest child sued the parents and claimed unjust enrichment since they persuaded her to do that work with the promise of providing the estate in return. The court reached a verdict that the parents had received unjust enrichment and awarded the oldest child a portion of the estate.

Unjust Enrichment Sample Case

An example of an unjust enrichment case involves Rainbow Media Holdings, Inc., which was the owner and operator of several cable television networks; and Basic Research, LLC, which was a company that sold nutritional products. Basic advertised its products on Rainbow's networks with the assistance of the advertising agency Icebox Advertising, Inc.

Basic paid Icebox to air its ads on Rainbow's networks, but Icebox didn't transfer payments over to Rainbow. However, Basic believed that Icebox would pay Rainbow in advance for all ads placed on Rainbow's networks. Rainbow allowed Icebox to pay up to 60 days after Icebox received invoices for the ads already run. 

Ultimately, Icebox filed for bankruptcy, which allowed Rainbow to recoup some of the money owed for Basic advertising on its networks. Consequently, Rainbow sued Basic for the remaining payment and claimed unjust enrichment. However, Basic believed it paid everything it owed since it made payments to Icebox.

As a result, the district court granted the motion given to Rainbow but denied the motion filed by Basic. It found Basic liable for the missing funds. Once the verdict went to an appeal, the U.S. Court of Appeals for the Tenth District found that the district court made the wrong decision. It found that Rainbow did not give enough evidence that Icebox could purchase ads from Rainbow and that Rainbow didn't have enough evidence that Basic was unjustly enriched by its ads running despite Rainbow not receiving payment.

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