Unjust Enrichment

  1. Suppose that Charlie owes Alice $100. Charlie is on his way to pay Alice the money when it falls out of his pocket. It is picked up by Bob. Charlie does not now have enough money to pay Alice. Does Alice have a claim based on unjust enrichment against Bob in respect to the $100?

To answer this question, an understanding of the elements of unjust enrichment is required. Blum tells us that unjust enrichment is predicated on two elements:

  1. The recipient must have been enriched at the expense of the claimant,
  2. And the circumstances must be such as to make this enrichment unjust. [1]

Bob was surely enriched when he picked up the money and because of this, the first element seems to be satisfied. [2] Bob picked up and kept money that was never intended for him. In fact, the money was dropped by mistake. This fact certainly reflects unjust enrichment and because of this, the second element is seemingly satisfied. [2] However, satisfaction of the first element requires that “the recipient (Bob) must have been enriched at the expense of the claimant”. [2] This poses a question of who has standing to be the claimant. Is it Alice or Charlie? 

Even though the money was intended for Alice, Alice never had possession of the money, nor did she have any type of relationship with Bob. Barlow explains that possession is the holding or controlling of personal property, with or without a claim of ownership. [3] The possessor must intend to possess and must actually hold or control the property. [4] Pierson v. Post is a seminal case that established the rule of first in time, first in right, which, in short, means the first person to possess the property has right to the title of the property. [5] 

Since Bob picked up and possessed the money, he became enriched by Charlie’s mistake. One could argue that Bob was enriched at the expense of Alice, but if the $100 was not paid at that time to Alice, she would not have incurred any detriment, or expense since the debt would still be outstanding and she would still be able to dun Charlie for payment. On the other hand, the expense to Charlie would be the original $100 debt, plus the additional expense of the $100 Bob unjustly received. This fact, for the purpose of establishing Alice’s standing as a claimant in the unjust enrichment cause of action, seems to disqualify Alice as a claimant and gives Charlie standing to pursue the cause of action. Lastly, Charlie and Alice could agree to assigning Charlie’s interest in the $100 to Alice (almost a zero percent chance of this happening) which would allow her exercise any rights Charlie may have to the money, including pursuing the cause of action for unjust enrichment. 

  1. Secondly, suppose that Alice has an account with Megabank. Megabank pays $100 to Bob, mistakenly believing that Alice has instructed it to do so, and debits Alice’s account accordingly. Megabank goes into liquidation. Does Alice have a claim against Bob to recover the $100?

To answer this question, an understanding of the elements of unjust enrichment is required. Blum tells us that unjust enrichment is predicated on two elements:

  1. The recipient must have been enriched at the expense of the claimant,
  2. And the circumstances must be such as to make this enrichment unjust. [1]

In this scenario, it is clear the elements of unjust enrichment were satisfied as they relate to Megabank and Bobs transaction. However, since Megabank is not in position (due to liquidation) to pursue the unjust enrichment cause of action, we must look to see if the elements of unjust enrichment apply to Alice and they do. [1] Because of a mistake, Bob was enriched at the expense of Alice. These facts satisfy the two required elements and Alice can seek restitution from Bob. [1]

  1. Thirdly, suppose that Alice sells a painting to Charlie very cheaply, mistakenly believing Charlie to be her brother. Charlie knows that Alice has made a mistake and that he will soon be asked to return the painting. In an attempt to make a profit, he sells the painting on to Bob. The sale is at a low price because Bob knows that the painting does not really belong to Charlie. Can Alice recover the painting or its value from Bob in an action based on unjust enrichment?

[1] Brian A. Blum, Examples & Explanations: Contracts 279 (6 ed. 2013).

[2] Id.

[3] D. Barlow Burke & Joseph A. Snoe, Property: Examples & Explanations 16 (3rd ed. 2008). 

[4] Id.

[5] Id. at 17

[2] Steven J. Burton, Contract Law (2014).

[3] Blum, 2.

[4] Id. at 4

[5] Id. at 5

[6] Id. at 3

[7] Id. at 6

DEFINITION of ‘Writ‘ A legal document written by a judge or other body with administrative or judicial jurisdiction, such as a court, that orders the person to whom it is addressed to perform or cease performing a specified action.

Definition of assumpsit. 1: an express or implied promise or contract not under seal on which an action may be brought. 2a: a former common-law action brought to recover damages alleged from the breach of an assumpsit: an action to recover damages for breach of a contract.