Last Christmas, Aunt Jane gave her niece Sylvia $1,000 as a gift. Aunt Jane had hoped that Sylvia would use this money to further her education. Shortly after Christmas, Sylvia squandered $600 on fun and frolic.
- Should Aunt Jane be entitled to restitution of the $600 that Sylvia spent?
- Should Aunt Jane be entitled to restitution of the remaining $400? Explain and discuss each question fully.
Since there was no express contract and this was a gift, Aunt Jane would pursue restitution under a cause of action for unjust enrichment. [1] Unjust enrichment occurs when one party has obtained a benefit at the expense of another party under circumstances that make it unfair for the recipient to retain the benefit without paying for it. [2] To prevail in an unjust enrichment suit, Aunt Jane would need to prove that (1) Sylvia was enriched at Aunt Jane’s expense, and (2) it would be unfair for Sylvia to keep the money given to her.
In addressing the first issue of whether Aunt Jane is entitled to restitution of the $600 spent by Sylvia, it is clear that Sylvia did benefit at Aunt Jane’s expense. However, Blum tells us that “to receive restitution, it is not enough that the uncompensated benefit has been conferred.” [3] Blum continues to state that the “claimant must not have intended to confer the benefit gratuitously and must not have imposed it on the recipient. [4] There was no imposition here and under the objective test, Aunt Jane’s actions provide objective evidence that she had gratuitous intent and did, without condition, voluntarily give the gift to Sylvia. [5] Simply hoping that Sylvia would use the money for her education without communicating this hope to Sylvia prior to, or during the giving of the gift, violates Sylvia’s reasonable expectation of how the gift could be utilized. [6] Because of these facts, element one is not satisfied and the cause of action for unjust enrichment will not prevail.
To resolve the second issue of whether Aunt Jane is entitled to restitution of the remaining $400, we must apply the following rule to our facts. That rule states that “enrichment is not unjust if the benefit was conferred with gratuitous intent”. [7] In applying this rule we can logically determine that the mere giving of a gift without conditions attached is evidence of gratuitous intent. Clearly, Aunt Jane is not be happy with the manner in which Sylvia is spending the gifted money. But, under the objective test, the voluntary nature of the benefit conferred without Aunt Jan’s communicated preconditions as to how the money was to be spent, suggests that Sylvia had the right to dispose of the gift as she pleased without threat of an attempt by Aunt Jane to seek compensation or restitution. [8] Because of these facts, Aunt Jane is not entitled to restitution of the remaining $400.
[1] Steven J. Burton, Contract Law 280 - 281 (2014).
[2] Brian A. Blum, Examples & Explanations: Contracts 269 (6 ed. 2013).
[3] Id. at 280
[4] Id.
[5] Blum, 281.
[6] Id.
[7] Id.
[8] Id.
Brian Rice