Recovery for Unjust Enrichment

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

Recovery for Unjust Enrichment in Express Contracts
Normally, recovery cannot be made under unjust enrichment through express contracts or contracts implied in fact. If the contractor wants to make a claim for restitution under unjust enrichment because of a change in the work, then the contractor must verify that the contract does not define an explicit process to provide compensation for changes. If explicit contract provisions exist for compensating changes in the work, then recovery under the doctrine of unjust enrichment is extremely unlikely.²

All avenues for recovery through the express contract must be exhausted before the theories of implied law or quasi-contracts can be implemented. The courts will usually uphold the language and intentions of the express contract if the parties comply with its provisions. For example, the United States Court of Appeals denied a contractor’s claim recovery because there was an express contract that both well-experienced parties fully understood. The owner committed no misrepresentation, and the contractor simply underestimated the work required:

…where the parties enter into a valid contract allocating risk and reward, courts should be reluctant to overturn that allocation simply because one party underestimated its risk.³

Before making a claim under unjust enrichment, the contractor should carefully review the contract language to determine whether the contract expressly covers the situation. Express contracts and implied contracts cannot be applied simultaneously to a given situation. Also, express contracts or contracts implied in fact preclude quasi-contracts or contracts implied in law. In other words, a contractor should not disregard what the contract expressly states and attempt to use other theories and implications outlined in law to recover damages from the owner. Normally, if the owner does not fulfill its contractual obligations, then the procedure to follow would be to claim damages allowable under the contract.

Recovery for Unjust Enrichment in Quasi-Contracts or Contracts Implied in Law
The most appropriate avenue to pursue recovery or restitution under unjust enrichment is through quasi-contracts or contracts implied in law. When the parties’ express contract is inadequate, incomplete, or absent, then implied law can be used to establish an agreement. In addition, if the owner breaches or abandons the contract or if the contract is rescinded, then implied law can be imposed.

Black’s Law Dictionary further describes the doctrine of unjust enrichment as “not contractual but equitable in nature.”⁴

When working with actual contracts, the agreement defines the duty. In implied or quasi-contracts, the duty defines the agreement. “The duty, which thus forms the foundation of a quasi-contractual obligation, is frequently based on the doctrine of unjust enrichment.”⁵ Even if parties have attempted to make an express contract workable but fail, then the door is opened for implied law.

The term “quantum meruit” is often used in the contractor’s attempt to recover from the owner through unjust enrichment. Quantum meruit means “as much as one deserves.” The contractor normally cannot recover its full cost of a particular item in dispute by simply repossessing the item. The claim must also consider the reasonable value of the work performed. Quantum meruit allows the contractor to recover “as much as it deserves” from the owner according to the reasonable value of services.

In one case, the contractor sued to recover costs on requested extra work and more expensive materials to complete a tiling project. The parties had not agreed to the cost and the method of compensation for the extra tiling work. Because the actual contract did not cover any specific payment schedule or method, implied law could be enforced. The contractor, under quasi-contracts, is due the reasonable value of the services rendered that the owner requests and accepts.⁶

In this situation, the contract did not adequately cover the terms of payment. Also, the contractor had conferred the services of extra tiling work with a reasonable expectation for payment. The owner had accepted and retained the services without sufficient payment and, therefore, was unjustly enriched. In this case, the contractor could claim for quantum meruit under unjust enrichment.

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    “Change Provision Defeats Contractor’s Claim for Extras,” Construction Claims Monthly, July 1983, 4.

³    Construction Law Claims & Liability, Remedies and Damages § 15.6A (CR.5/88) 1, 1988.

⁴    Black’s Law Dictionary, 1705. (4th ed. 1968).

⁵    Am. Jur. 2d 944, Restitution and Implied Contracts, § 2, 66.

⁶    Construction and Design Law Digest, 413 § 23 1988.

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