“Unjust enrichment” may occur any time one party profits at the expense of another party. While state laws may vary, unjust enrichment usually refers to benefits that are received passively, accidentally, or by mistake. In general, unjust enrichment is considered to be unfair, and laws require a party that has been unjustly enriched to pay restitution to the other party.
For example, suppose a person enters into a contract with an auto body shop to paint two of their cars. Suppose that the auto shop completed the painting of one car, but couldn’t finish the second car. Here, the owner of the cars will be unjustly enriched if they don’t pay for the paint job of the first car. Likewise, the shop will be unjustly enriched if they retain payment for two paint jobs, but only complete one. While the shop may be in breach for not finishing the second car, they are still entitled to payment for the work they have completed on the first car.
Unjust enrichment most frequently arises in breach of contract lawsuits. A common contract situation involving unjust enrichment is where incomplete services are not paid for. Another common example of unjust enrichment in contracts is where one party receives property or goods in a way that is considered unfair. Unjust enrichment can also occur in situations beside a contract claim, such as those involving personal injuries or criminal violations.
Specifically to contracts, there are methods for recovery in order to prevent unjust enrichment of one party. The most common equitable remedy for unjust enrichment is restitution, which is monetary payment for the benefit that was wrongfully obtained by the other party.
- Restitution is the amount gained by the enriched party. A party that is unjustly enriched almost always has to pay restitution to the other party
- Compensation, on the other hand, is based on how much the aggrieved party lost, not by how much the enriched party gained
- Additionally, restitution may involve a requirement that the enriched party return a specific item that they had gained. Compensation, however, might require an enriched party to pay the other party for the value of the property
This difference is important, because it can affect the overall amount that needs to be paid. Compensation is usually reserved for standard breach of contract cases that don’t involve unjust enrichment.
Unjust enrichment is a common issue when it comes to breach of contract claims. You should contact a business lawyer if you a contract dispute where unjust enrichment may be involved. Your lawyer can go over the laws in your area with you to help you obtain the appropriate remedy. Or, if another party is claiming unjust enrichment against you, your lawyer can represent you in court during a lawsuit.