Unjust Enrichment - Equitible Relief for the Creditor

Many of my clients fail to recognize that the law does recognize equitable forms of relief when they can not prove the existence of a contract. This is known in the law as "equitable" relief. A perfect example is the typical law school example where the contractor paints the wrong house. He has rendered a benefit to the homeowner but there is not privity of contract between the contrator and the owner. This type of equitable relief is known "Unjust Enrichment."

The theory of unjust enrichment is equitable relief a court will grant when the court deems it unfair that someone obtains a benefit without paying a fair price. This theory of liability arises when there is no privity of contract between the parties, yet one party has obtained a benefit through the other’s efforts. For example, if the XYZ Company supplies construction material for a given job and, through the principal contractor’s default, the XYZ Company does not get paid , the court could award XYZ Company an amount equal to the fair market value for the material. The theory of unjust enrichment is equitable relief a court will grant when the court deems it unfair that someone obtains a benefit without paying a fair price. The court could award the company an amount equal to the fair market value for the material supplied if all the "elements" of unjust enrichment are met.

As I said, there are elements that must be met before the contractor can succeed. These are:

1. A benefit was conferred by the contractor upon the owner of property,

2. The owner knew the benefit was being conferred, and

3. Retention of the benefit by the owner would be unjust without payment.

The latter two elements are the most difficult. The contractor must prove that the owner knew the work was being performed and that it would be inequitable for the owner to retain this benefit without paying the contractor. This final element is what is called “balancing the equities.” For example, if the owner has paid the original contractor in full, the courts, in certain jurisdictions, have stated that it is inequitable to make the owner pay twice and found in favor of the owner. On other hand, where the owner has not paid the original contractor in full or has paid others to complete the work, courts have found in favor of the contractor.

The thrust of this type of relief is that an individual can not just sit and allow another to confer a benefit upon them without paying for it. Examples are when goods are shipped or delivered to the wrong location, the person accepts the goods and uses or resells the goods or when a contractor paints the exterior of a building and the owner allows the painting to continue without notifying the painter that they are painting the wrong building or where the contractor failed to properly perfect a mechanic's lien. To give you a personal example, some years ago I represented a client who was paid even though he demolished the wrong building! My client mistakenly raised the building next door. Luckily, the building he did demolish was condemned and the court awarded my client the reasonable fees for the demolition.

So don't give up hope. There is some relief available even if