Unjust Enrichment Defenses: Everything You Need to Know
An unjust enrichment defense involves a legal case brought by a defendant to prove that a plaintiff benefited unfairly from goods or services and didn't pay.3 min read
An unjust enrichment defense involves a legal case brought by a defendant to prove that a plaintiff benefited unfairly from goods or services and didn't pay.
What is Unjust Enrichment?
Also known as an implied contract by law or quasi-contract, unjust enrichment defenses occur when one party benefits unfairly from the efforts of the other without offering compensation. This might occur when one party provides goods or services while expecting to be paid only to find that the other party refuses to do so. It typically occurs when there is no contract between the two parties or a breach of contract occurs.
Most laws state that those parties that benefit from unjust enrichment must pay restitution to the other party. If the enriched party refuses to pay restitution, the other party can file a civil suit to receive payment.
Defenses in Unjust Enrichment
On occasion, there are instances that prevent one party from receiving restitution for unjust enrichment.
- Doctrine of unclean hands. The defense argues that the plaintiff should not receive an equitable remedy due to the plaintiff acting unethically or in bad faith.
- Fraud. For example, victims of a Ponzi scheme sometimes profit, but the original profits come from other victims.
- Minors. Underage defendants who received a payment on accident and spent some might not be made liable for the full amount, even if they knew about the mistake.
When the case goes to court, the defendant can either deny part of the plaintiff's claim or add new elements in a defense. If the latter occurs, the defendant would deny anything argued by the plaintiff.
This argument doesn't deal with the burden of proof between the two parties. Instead, it allows for substantive arguments. Analyzing the difference between denials and defenses allows for a better understanding of finding common ground in an unjust enrichment case.
For instance, say a plaintiff owes a certain amount of money to the defendant and doesn't intend to pay the defendant back. Instead, the plaintiff unintentionally transfers the owed sum to the defendant. In this case, the defendant usually can retain the benefit, even though the plaintiff made the mistake.
How is Unjust Enrichment Proved?
Each state might have different definitions pertaining to unjust enrichment. Most of the time, a court considers the following questions:
- Did the defendant receive an enrichment due to the plaintiff's activity?
- Did the defendant receive an enrichment at the plaintiff's expense?
- Was the enrichment unjust or unfair?
- Can the defendant have access to any defense?
- Are there specific remedies available for the plaintiff?
If the defendant received a benefit at the plaintiff's expense, most court cases deem that the enrichment was unjust. However, if the plaintiff received a benefit, then the enrichment might not be unjust. In addition, certain jurisdictions make sure the defendant knows that he or she is receiving an unjust enrichment.
Unjust enrichment cases are difficult to prove, since they involve several special situations. Typically, courts deal with them on a case-by-case basis. If you have questions, consult with a lawyer.
Recovering When You Don't Have a Contract
If you did not sign a contract and felt like you were treated unfairly in a business deal, you might be able to apply quantum meriut or unjust enrichment to obtain restitution. However, some courts do not allow you to claim unjust enrichment in these instances, even if there are other claims available.
If you have a quasi-contract, this typically requires one party to prove that the plaintiff gives a service or product to the other defendant and the defendant received a benefit from it. In addition, both parties believed that defendant would pay for the service or product.
Gaining Restitution without Dealing with Unjust Enrichment
On occasion, the court fails to provide an unjust enrichment remedy, which isn't always a bad outcome. Certain provisions can offer a reprieve in situations if a business deal doesn't happen. If this occurs, the recovery can only be restitution.
Damages that occur under unjust enrichment are oftentimes less than those that would accrue if there's a breach of contract. Pertaining to restitution damages, the amount is based upon the amount given to the other party and not the amount received from the benefit.
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