Obstacles to Recovery for Unjust Enrichment

This is the third blog post in a three-part series on unjust enrichment claims in construction contracts. The first post explores examples of unjust enrichment, and the second post discusses recovery for unjust enrichment in “express contracts,” quasi-contracts, or contracts implied in law. This third post focuses on obstacles to recovery for unjust enrichment and conclusions.

It is a general principle of contract law that a successful claimant in a breach of contract case is entitled to be put back in the same position it would have held had the breach not occurred. Unjust enrichment is:

a benefit by chance, mistake or another’s misfortune for which the one enriched has not paid or worked and morally and ethically should not keep. If the money or property received rightly should have been delivered or belonged to another, then the party enriched must make restitution to the rightful owner. Usually, a court will order such restitution if a lawsuit is brought by the party who should have the money or property.¹

Under an unjust enrichment claim, the defendant (owner) unjustly receives and retains something of value at the plaintiff’s (contractor’s) expense. Unjust enrichment precedes restitution, which is the restoration of the contractor and owner to a just and equitable state. Unjust enrichment is the act or state of imbalance or inequity, and restitution is the return to equity.

Obstacles
Obstacles or key issues that prevent the ability to gain restitution through unjust enrichment under quasi-contracts include officiousness, acceptance, reasonable expectation, tortuous conduct, and authority.

Officiousness. To officiously confer services is to enrich but not to unjustly enrich. If one volunteers services or simply performs them at no request, compensation for those services is not inferred. The purpose behind this theory is to protect those who have “benefits thrust upon them” and to penalize “those who thrust benefits” upon others. If the owner does not request services, these services can be considered as volunteered. Circumstances that present an immediate threat of loss of property, goods, or investments, however, may not require a request from the owner if the contractor is acting in good faith to protect the owner.

Acceptance. The owner should accept the work performed or services rendered before being considered enriched. This gives the owner the freedom to reject or accept the work. If the owner rejects the work, enrichment may not have occurred. This protects the owner from being required to compensate for faulty or incomplete work of no value. In order to pursue unjust enrichment without acceptance, the contractor should prove that the owner withheld approval or acceptance without cause.

Reasonable Expectation. Reasonable expectation of compensation is another test that justifies restitution under unjust enrichment and implied law. The circumstances under which the services were rendered must reasonably show the intention and understanding that the owner was to make payment to the contractor. If the intent and understanding of the specific parties cannot be shown, the point could also be proven by what “reasonable” people would do under the same circumstances. If reasonable expectation of compensation cannot be proven, then the work performed by the contractor may be considered gratuitous.

Tortuous Conduct. Full restitution of the contractor’s work may not be awarded if the owner’s conduct is not tortuous (harmful). If the owner is not at fault and has acted reasonably, and if changes are such that the owner would suffer a loss in giving full restitution, then full restitution may not be awarded. Also, if the contractor contributed to the wrongful acts, then restitution may not be given. If the contractor is less guilty than the owner, or if the conduct of the contractor is not related to the issues claimed, then restitution may be granted. If, however, the owner is tortuous, has knowledge of the benefits gained, and has had the opportunity to make restitution, then the contractor can claim implied law and unjust enrichment to make possible recovery from the owner.

Authority. Another potential problem area of which the contractor should be aware is the authority of the party requesting services. Consider a situation in which two government employees asked a contractor to make repairs to an existing aqueduct. After completion of repairs, the government would not compensate the contractor because those employees did not have the authority to request work. The contractor sued. In this example, the significant points for the contractor to prove are that the employees were acting for the government and that the government benefited from the contractor’s services. For successful recovery, the contractor must show that these government employees had sufficient authority to request services.²

Conclusion
The doctrine of unjust enrichment stands as a viable method of recovery for the contractor when the owner has benefited from the contractor’s work and has not compensated the contractor for such work. Unjust enrichment, as a prerequisite for restitution, can be used in combination with implied law and quantum meruit to recover the reasonable value of the work performed.

During the contract phase and when problems arise, the contractor should be knowledgeable of what related circumstances are covered by express contract terms and conditions. The contractor should also be aware of any actions and any oral or written communication by involved parties that would prove or disprove reasonable expectation of compensation, acceptance of the work, officiousness, tortuous conduct, authority, etc. The application of quasi-contracts or implied law will take into consideration such information to decide if the owner truly is unjustly enriched and whether the contractor deserves restitution for the value of work performed.

¹     “unjust enrichment,” Law.com, ALM Media Properties, LLC, 2024. https://dictionary.law.com/default.aspx?selected=2197#:~:text=a%20benefit%20by%20chance%2C%20mistake,restitution%20to%20the%20rightful%20owner.

²    Construction and Design Law Digest, 89 Rights and Remedies § 23.4d 1 1988.

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