Unjust enrichment
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In laws of equity, unjust enrichment occurs when one person is enriched at the expense of another in circumstances that the law sees as unjust. Where an individual is unjustly enriched, the law imposes an obligation upon the recipient to make
restitution The law of restitution is the law of gains-based recovery, in which a court A court is any person or institution, often as a government institution, with the authority to Adjudication, adjudicate legal disputes between Party (law), parties ...
, subject to defences such as
change of position Change of position is a defence to a claim in unjust enrichment In Equity (law), laws of equity, unjust enrichment occurs when one person is enriched at the expense of another in circumstances that the law sees as unjust. Where an individual is ...
. Liability for an unjust (or unjustified) enrichment arises irrespective of wrongdoing on the part of the recipient. The concept of unjust enrichment can be traced to Roman law and the maxim that "no one should be benefited at another's expense": ''nemo locupletari potest aliena iactura'' or ''nemo locupletari debet cum aliena iactura''. The law of unjust enrichment is closely related to, but not co-extensive with, the law of restitution. The law of restitution is the law of gain-based recovery. It is wider than the law of unjust enrichment. Restitution for unjust enrichment is a subset of the law of restitution in the same way that compensation for breach of contract is a subset of the law relating to compensation. Unjust enrichment is not to be confused with illicit enrichment, which is a legal concept referring to the enjoyment of an amount of wealth by a person that is not justified by reference to their lawful income.


History


Roman law

In civil law systems, unjust enrichment is often referred to as ''unjustified'' enrichment. Its historical foundation of enrichment without cause can be traced back to the Corpus Iuris Civilis. While the concept of enrichment without cause was unknown in classical Roman law, Roman legal compilers eventually enunciated the principle of unjustified enrichment based on two actions of the classical Roman period—the ''condictio'' and the ''actio de in rem verso''. The ''condictio'' authorized recovery by the plaintiff of a certain object or money in the hands of the defendant. The defendant was considered a borrower who was charged with returning the object or money. For the ''actio de in rem verso'', the plaintiff bore the burden of specifying the cause for his demand, namely, demanding the restitution of assets that had exited the plaintiff's patrimony and entered the defendant’s patrimony through the acts of the defendant’s servants. The coherent concept of unjustified enrichment then appeared in the Justinian Code, based on Roman pragmatism with equitable considerations and moral principles of Greek philosophy. In the Justinian Code, ''condictiones'' were grouped into categories, such as when the plaintiff had given a thing or money: # in contemplation of a future result that did not follow; # for a reason disapproved by law or repugnant to public policy; # by mistake because payment was not actually due; or # without a good reason for the transaction. Further, the ''actio de in rem verso'' gradually expanded to cover instances in which third parties were enriched at the expense of the impoverished obligee, and ''unjustified enrichment'' was recognized as a source of obligations under the heading of "quasi-contract".


Civil law

The interpretations of Roman law principles on unjustified enrichment, by the French Jurist Jean Domat, and the German jurist
Friedrich Carl von Savigny Friedrich Carl von Savigny (21 February 1779 – 25 October 1861) was a German jurist A jurist is a person with expert knowledge of law; someone who analyses and comments on law. This person is usually a specialist legal scholar, mostly (but ...
, formed the respective origins of the modern French and German law on unjustified enrichment. Domat developed the French unjustified enrichment principles based on the ''actio de in rem verso'', as well as a modified version of the Roman concept of ''causa'' (cause), which renders contracts actionable even when they are not normally recognized under Roman law. In contrast, the concept of unjustified enrichment is considerably broader and more frequently invoked in Germany and Greece to address issues of restitution as well as restoration for failed juridical acts.
Equitable tracing Tracing is a legal process, not a remedy, by which a claimant demonstrates what has happened to his/her property, identifies its proceeds and those persons who have handled or received them, and asks the court to award a proprietary remedy in resp ...
is a particularly well suited remedial tool.


Common law

''See also'':
English unjust enrichment law The English law of unjust enrichment is part of the English law of obligations, along with the law of English contract law, contract, English tort law, tort, and English trust law, trusts. The law of unjust enrichment deals with circumstances in whi ...
In systems of law derived from the English
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...
, the historical core of the law of unjust enrichment lies in
quasi-contract A quasi-contract (or implied-in-law contract or constructive contract) is a Legal fiction, fictional contract recognised by a court. The notion of a quasi-contract can be traced to Roman law and is still a concept used in some modern legal systems ...
. These were common law (as distinct from equitable) claims giving rise to a personal liability to pay the money value of a benefit received from another. Legal scholars from
Oxford Oxford () is a city in England. It is the county town and only city of Oxfordshire. In 2020, its population was estimated at 151,584. It is north-west of London, south-east of Birmingham and north-east of Bristol. The city is home to the Un ...
,
Cambridge Cambridge ( ) is a College town, university city and the county town in Cambridgeshire, England. It is located on the River Cam approximately north of London. As of the 2021 United Kingdom census, the population of Cambridge was 145,700. Cam ...
and
Harvard Harvard University is a private Ivy League research university in Cambridge, Massachusetts. Founded in 1636 as Harvard College and named for its first benefactor, the History of the Puritans in North America, Puritan clergyman John Harvard ...
at the turn of the 20th century began to rationalise these disparate actions into a coherent body of law. The principle said to underlie these actions was eventually recognized as unjust enrichment. Subsequent scholarship has sought to expand the explanatory power of the principle of unjust enrichment and it is now often said (albeit not without controversy) to encompass both common law and equitable claims.


Framework

Cases of unjust (or unjustified) enrichment can be examined in the following way: * Was the defendant ''enriched''? * Was the enrichment ''at the expense of the claimant''? * Was the enrichment ''unjust''? * Does the defendant have a ''defense''? * What ''remedies'' are available to the claimant? These questions are a familiar part of the modern English law of unjust enrichment, having been popularised by the writing of Professor Peter Birks and expressly endorsed by English courts. The framework provides a useful taxonomical function in Australian law, though the concept of unjust enrichment has been subject to inconsistent treatment by Australian courts, as discussed below. Stated at this level of abstraction, the framework is a useful grounding for comparative study between common law and civil law jurisdictions.


The meaning of ''unjust'': unjust factors vs. absence of basis

Generally speaking, the mere receipt of a benefit from another is unobjectionable and does not attract legal consequences. The exception is where such receipt is "unjust" or "unjustified". Both civil and
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...
legal systems have bodies of law providing remedies to reverse such enrichment. A conceptual split, albeit one not necessarily coextensive with the common law - civil distinction, is between systems based on an "unjust factor" approach and systems based on an "absence of basis" approach. *
Common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...
systems such as those of
England England is a Countries of the United Kingdom, country that is part of the United Kingdom. It shares land borders with Wales to its west and Scotland to its north. The Irish Sea lies northwest and the Celtic Sea to the southwest. It is separa ...
,
Australia Australia, officially the Commonwealth of Australia, is a sovereign country comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands. With an area of , Australia is the largest country by ...
,
Canada Canada is a country in North America. Its Provinces and territories of Canada, ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, covering over , making it the world ...
and the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...
typically adopt the "unjust factor" approach. In this analysis, the claimant must point to a positive reason why the defendant's enrichment is unjust. Examples of "unjust factors" that ground a claim for restitution include: mistakes of fact or law; total failure of consideration,
duress Coercion () is compelling a party to act in an involuntary manner by the use of threats, including threats to use force against a party. It involves a set of forceful actions which violate the free will of an individual in order to induce a desi ...
,
undue influence Undue influence (UI) is a psychological process by which a person's free will and judgement is supplanted by that of another. It is a legal term and the strict definition varies by jurisdiction. Generally speaking, it is a means by which a pers ...
, and the ''Woolwich'' ground. * Civil law systems such as those of
France France (), officially the French Republic ( ), is a country primarily located in Western Europe. It also comprises of Overseas France, overseas regions and territories in the Americas and the Atlantic Ocean, Atlantic, Pacific Ocean, Pac ...
and
Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated between ...
typically adopt an "absence of basis" approach. On this analysis, the defendant is obliged to make restitution if there is no "basis" for his receipt: for example, because the contract under which the defendant received the benefit was void ''ab initio''. Some common law systems have shown signs of a possible shift towards this approach. In most cases, the conceptual approach does not affect the outcome of a case. For example, suppose that A makes an oral contract with B under which A will pay $100 for certain services to be provided by B. Further suppose that A pays the money but B discovers that, pursuant to legislation, contracts for such services are void unless in writing. B refuses to perform. Can A recover his payment? On both approaches, B is unjustly enriched at A's expense. On the "absence of basis" approach, B's enrichment has no legitimate explanatory basis because the contract was void. On the "unjust factor" approach, there has been a total failure of considerationthat is, A has received no part of the bargained-for counter-performance; restitution follows automatically from the fact of invalidity.


Remedies for unjust enrichment: personal and proprietary restitution

The remedy for unjust enrichment is
restitution The law of restitution is the law of gains-based recovery, in which a court A court is any person or institution, often as a government institution, with the authority to Adjudication, adjudicate legal disputes between Party (law), parties ...
: the restoration of what was conferred to the claimant. In short, the correcting of the injustice that occurred when the claimant suffered a subtraction of wealth and the defendant received corresponding benefit. Restitution can take the form of a personal or a proprietary remedy. Where a personal remedy is awarded, the defendant is ordered to pay the money value of the benefit received. This personal money award is the typical form of restitution ordered. Where a proprietary remedy is awarded, the court recognises (or declares) that the defendant has a beneficial or security interest in specific property of the defendant. Whether proprietary remedies can be awarded depends on the jurisdiction in question. * In English law, the orthodox view is that unjust enrichment generally triggers personal, rather than proprietary remedies. This is because the law of
quasi-contract A quasi-contract (or implied-in-law contract or constructive contract) is a Legal fiction, fictional contract recognised by a court. The notion of a quasi-contract can be traced to Roman law and is still a concept used in some modern legal systems ...
only generate personal money awards: either a liquidated debt (as in actions for money had and received or money paid) or a sum assessed by a civil jury or the court itself (as in quantum meruit or quantum valebat). Scholars seeking to expand the explanatory power of unjust enrichment have argued that other areas of the law such as subrogation and claims to traceable substitutes form part of the law of unjust enrichment. This view has been accepted, though its implications remain unclear. * In Australian law, actions derived from the common money counts continue to generate only personal remedies. The doctrinal basis of subrogation is not unsettled: it has nothing to do with unjust enrichment. Claims to traceable substitutes are a part of the law of property, not unjust enrichment.


National systems


Australia

Whether there is a distinct body of law in Australia known as the law of unjust enrichment is a highly controversial question. In '' Pavey & Mathews v Paul'
(1987) 162 CLR 221
the concept of unjust enrichment was expressly endorsed by the High Court of Australia. This was subsequently followed in numerous first instance and appellate decisions, as well as by the High Court itself. Considerable skepticism about the utility of the concept of unjust enrichment has been expressed in recent years. The equitable basis for the action for money had and received has instead been emphasised and i
''Australian_Financial_v_Hills''_[2014
HCA_14.html" ;"title="014">''Australian Financial v Hills'' [2014
HCA 14
">014">''Australian Financial v Hills'' [2014
HCA 14
the plurality held that the concept of unjust enrichment was effectively 'inconsistent' with the law of restitution as it had developed in Australia. It is worth noting that the analytic framework had been expressly endorsed by the High Court just two years before i
''Equuscorp v Haxton'' [2012
HCA 7]. For the moment, the concept of unjust enrichment appears to serve only a taxonomical function.


Belgium

The acceptance of the unjust enrichment has been confirmed multiple times in
Belgium Belgium, ; french: Belgique ; german: Belgien officially the Kingdom of Belgium, is a country in Northwestern Europe. The country is bordered by the Netherlands to the north, Germany to the east, Luxembourg to the southeast, France to the ...
by the
Court of Cassation A court of cassation is a high-instance court A court is any person or institution, often as a government institution, with the authority to Adjudication, adjudicate legal disputes between Party (law), parties and carry out the administrati ...
, which has ruled that the unjust enrichment is a general principle of law. The Court has stated that the legal basis for the unjust enrichment is equity. According to the Court, five elements constitute the unjust enrichment: #an enrichment; #an impoverishment; #a connection between the enrichment and the impoverishment; #an absence of a cause of the enrichment; #the person trying to invoke the unjust enrichment cannot invoke the
negotiorum gestio ''Negotiorum gestio'' (, Latin for "management of business") is a form of spontaneous voluntary agency (law), agency in which an intervenor or intermeddler, the ''gestor'', acts on behalf and for the benefit of a principal (commercial law), princip ...
or the undue payment.


United Kingdom

The law of unjust enrichment in England rapidly developed during the second half of the 20th century. It has been heavily influenced by the writings of jurists from
Oxford Oxford () is a city in England. It is the county town and only city of Oxfordshire. In 2020, its population was estimated at 151,584. It is north-west of London, south-east of Birmingham and north-east of Bristol. The city is home to the Un ...
and
Cambridge Cambridge ( ) is a College town, university city and the county town in Cambridgeshire, England. It is located on the River Cam approximately north of London. As of the 2021 United Kingdom census, the population of Cambridge was 145,700. Cam ...
. England adopts the "unjust factor" approach. In Scotland, the law developed in a piecemeal fashion through the twentieth century, culminating in three pivotal cases in the late 1990s. The most crucial of these was Shilliday v Smith, in which Lord Roger essentially laid the bedrock for what is now considered modern Scots unjustified enrichment law, bringing together the fragmented law into one framework, drawing from the principles of Roman Law upon which Scots Law as a whole is based (note the term "unjustified" is preferred to "unjust" in Scotland). Unjustified enrichment is more established as a fundamental part of the Scots law of obligations than unjust enrichment is in English law.


United States

The '' Restatement (Third) of Restitution and Unjust Enrichment'' (2011) (“R3RUE”) states that unjust enrichment is a body of legal obligations under the
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipres ...
and equity — but separate from
tort A tort is a civil wrong that causes a claimant to suffer loss or harm, resulting in legal liability for the person who commits the tortious act. Tort law can be contrasted with criminal law, which deals with criminal wrongs that are punishab ...
and
contract law A contract is a legally enforceable agreement between two or more Party (law), parties that creates, defines, and governs mutual rights and obligations between them. A contract typically involves the transfer of goods, Service (economics), ser ...
— that is available to take away an enrichment that lacks an adequate legal basis. A claim of restitution for unjust enrichment “results from a transaction that the law treats as ineffective to work a conclusive alteration in ownership rights.” The ''Restatement (Third)'' and its predecessor, the ''Restatement on Restitution'' (1937), advocate for treating restitution as a unified and cohesive body of law, rather than a muddled variety of miscellaneous legal and equitable claims, remedies, and doctrines such as
quantum meruit ''Quantum meruit'' is a Latin Latin (, or , ) is a classical language belonging to the Italic languages, Italic branch of the Indo-European languages. Latin was originally a dialect spoken in the lower Tiber area (then known as Latium) aro ...
, quantum valebant, account of profits,
quasi-contract A quasi-contract (or implied-in-law contract or constructive contract) is a Legal fiction, fictional contract recognised by a court. The notion of a quasi-contract can be traced to Roman law and is still a concept used in some modern legal systems ...
,
constructive trust A constructive trust is an equitable remedy imposed by a court to benefit a party that has been wrongfully deprived of its rights due to either a person obtaining or holding a legal property right which they should not possess due to unjust enri ...
, money had and received, and so forth. Because the common law is mostly governed by state law, especially after '' Erie Railroad Co. v. Tompkins'' (1938), restitution is mostly determined by the law of each state and territory. However, it can also be a remedy under federal law. Federal patent and copyright law has long allowed recovery for either damages or profits. In '' Livingston v. Woodworth'', 56 U.S. 546 (1854), the Supreme Court held that a patent-owner could sue in equity for an infringer’s profits, saying that the ill-gotten profits belonged “''
ex aequo et bono ''Ex aequo et bono'' (Latin for "according to the right and good" or "from equity and conscience") is a List of legal Latin terms, Latin phrase that is used as a legal technical terminology, term of art. In the context of arbitration, it refers to ...
''” to the owner of the patent. (This mirrored the landmark English ruling of
Lord Mansfield William Murray, 1st Earl of Mansfield, Privy Council of Great Britain, PC, Serjeant-at-law, SL (2 March 170520 March 1793) was a British barrister, politician and judge noted for his reform of English law. Born to Scottish nobility, he was edu ...
in ''
Moses v Macferlan ''Moses v Macferlan'' (1760) 2 Bur 1005 is a foundational case in the law of restitution holding that in certain circumstances such as when money is paid by mistake, for failed consideration or under oppression; the law will allow the money to be ...
'' (K.B. 1760) that a plaintiff may sue “for money which, ''ex aequo et bono'', the defendant ought to refund” — whether suing in law or in equity.) Later, recovery for either damages or profits was codified in statute. The Supreme Court identified recovery of profits under the Copyright Act as a form of equitable relief for “unjust enrichment” in '' Sheldon v. Metro-Goldwyn Pictures Corp.'' (1940). In '' Kansas v. Nebraska'', 574 U.S. 445 (2015), the Supreme Court ordered restitution by Nebraska as an
equitable remedy Equitable remedies are judicial remedies developed by courts of Equity (law), equity from about the time of Henry VIII of England, Henry VIII to provide more flexible responses to changing social conditions than was possible in precedent-based commo ...
for breach of an interstate water-sharing agreement with Kansas. The majority cited the Third Restatement to support the availability of restitution for “ opportunistic breach” of contract. In '' Liu v. Securities and Exchange Commission'' (2020), the Supreme Court held that restitution (usually called “disgorgement” in U.S. securities law) is available for violations of federal securities law, because the SEC is authorized to seek “equitable relief” under 15 U.S.C. § 78u(d)(5). In '' AMG Capital Management, LLC v. FTC'' (2021), the Supreme Court held that statutory authority for the Federal Trade Commission to sue for an “injunction” does not authorize suit for restitution. The court unanimously held that the statutory language refers to prospective equitable relief, and does not include retrospective monetary relief. The North Dakota Supreme Court has ruled that five elements must be established to prove unjust enrichment: * An enrichment * An impoverishment * A connection between enrichment and the impoverishment * Absence of a justification for the enrichment and impoverishment * An absence of a remedy provided by the law In Massachusetts, there are some decisions denying recovery in restitution by the breaching party although this is not generally the rule in the United States. In 1999, unspent funds incorrectly deposited during 1998 into a wrong bank account were frozen when a judge ruled it was ''unjust enrichment''; the unintended recipient sued.


Canada

The doctrine of unjust enrichment was definitively established as a fully fledged course of action in Canada i
Pettkus_v._Becker,_1980_CanLII_22_(SCC),_ Pettkus_v._Becker,_1980_CanLII_22_(SCC),_[1980
/nowiki>_2_SCR_834">980">Pettkus_v._Becker,_1980_CanLII_22_(SCC),_[1980
/nowiki>_2_SCR_834
To_establish_unjust_enrichment,_the_Plaintiff_needs_to_show:_(i)_enrichment;_(ii)_deprivation;_(iii)_causal_connection_between_enrichment_and_deprivation;_and_(iv)_absence_of_juristic_justification_for_the_enrichment. The_concept_of_deprivation_and_enrichment_are_extremely_broad._Deprivation_refers_to_any_loss_of_money_or_money's_worth_in_the_form_of_contribution_while_A_is_enriched_if_B_contributes_to_the_acquisition_of_assets_in_A's_name._The_causal_connection_between_enrichment_and_deprivation_must_be_"substantial_and_direct"._The_absence_of_juristic_reason_is_satisfied_if_a_Plaintiff_establishes_a_reason_why_the_benefit_ought_not_be_retained,_or_if_the_Defendant_demonstrates_a_convincing_argument_in_favour_of_retention_of_the_property._Remedy_for_unjust_enrichment_is_frequently_an_imposition_of_constructive_trust_over_the_property_unjustly_retained.


_See_also

*Restitution.html" ;"title="980
/nowiki>_2_SCR_834.html" ;"title="980">Pettkus v. Becker, 1980 CanLII 22 (SCC), [1980
/nowiki> 2 SCR 834">980">Pettkus v. Becker, 1980 CanLII 22 (SCC), [1980
/nowiki> 2 SCR 834 To establish unjust enrichment, the Plaintiff needs to show: (i) enrichment; (ii) deprivation; (iii) causal connection between enrichment and deprivation; and (iv) absence of juristic justification for the enrichment. The concept of deprivation and enrichment are extremely broad. Deprivation refers to any loss of money or money's worth in the form of contribution while A is enriched if B contributes to the acquisition of assets in A's name. The causal connection between enrichment and deprivation must be "substantial and direct". The absence of juristic reason is satisfied if a Plaintiff establishes a reason why the benefit ought not be retained, or if the Defendant demonstrates a convincing argument in favour of retention of the property. Remedy for unjust enrichment is frequently an imposition of constructive trust over the property unjustly retained.


See also

*Restitution">Law of restitution *Quasi-contract *Other parts of the law of obligations: **Contract, Law of contract **Tort law, Law of tort **Trust law, Law of trusts *Leading scholars on the English English unjust enrichment law, law of unjust enrichment; **
Robert Goff, Baron Goff of Chieveley Robert Lionel Archibald Goff, Baron Goff of Chieveley, (12 November 1926 – 14 August 2016) was an English Barristers in England and Wales, barrister and judge who was Lords of Appeal in Ordinary#Senior and Second Senior Law Lord, Senior Lord ...
** Professor Gareth Jones ** Professor Peter Birks ** Professor Andrew Burrows ** Professor Graham Virgo ** Professor Charles Mitchell


References

{{DEFAULTSORT:Unjust Enrichment Civil law (common law) Contract law Legal doctrines and principles Restitution