Learning Outcomes
After studying this article, you will be able to identify and apply the core elements of an unjust enrichment claim, explain what makes enrichment ‘unjust’ in law, distinguish unjust enrichment from contract and tort, and recognise common defences. You will also be able to analyse scenarios to determine when a restitutionary remedy may be available, as required for SQE1.
SQE1 Syllabus
For SQE1, you are required to understand the basic structure of unjust enrichment claims and their practical application. Focus your revision on:
- the four essential elements of an unjust enrichment claim
- the meaning of ‘enrichment’ and ‘at the expense of the claimant’
- what constitutes an ‘unjust’ factor in law (e.g. mistake, failure of basis, duress)
- the main defences to unjust enrichment
- how unjust enrichment interacts with contract and tort law
Test Your Knowledge
Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.
- What are the four elements a claimant must prove to succeed in a claim for unjust enrichment?
- Give two examples of situations where enrichment is considered ‘unjust’ in law.
- Can a defendant raise a ‘change of position’ defence to an unjust enrichment claim? Briefly explain.
- How does unjust enrichment differ from a claim in contract?
Introduction
Unjust enrichment is a separate branch of the law of obligations. It provides a remedy where one party has received a benefit at another’s expense in circumstances the law recognises as unjust, and where no other legal claim (such as contract or tort) is available. The law of unjust enrichment is primarily concerned with reversing gains that are not legally justified.
Key Term: unjust enrichment
A legal claim requiring the defendant to return a benefit received at the claimant’s expense, where it would be unjust for the defendant to retain it.
The Four Elements of Unjust Enrichment
To succeed in a claim for unjust enrichment, the claimant must prove all four elements:
- The defendant has been enriched.
- The enrichment was at the claimant’s expense.
- The enrichment is unjust in law.
- There is no applicable defence.
Each element must be satisfied for the claim to succeed.
Key Term: enrichment
A benefit received by the defendant, such as money, goods, services, or discharge of a debt.Key Term: at the expense of the claimant
The benefit to the defendant must correspond to a loss or expense suffered by the claimant.Key Term: unjust factor
A legally recognised reason why it would be unfair for the defendant to keep the benefit (e.g. mistake, failure of basis, duress).Key Term: change of position defence
A defence where the defendant, in good faith, has changed their circumstances in reliance on the benefit, making restitution inequitable.
Worked Example 1.1
A bank customer accidentally transfers £2,000 to the wrong account due to a typing error. The recipient, unaware of the mistake, spends the money on a non-refundable holiday. Can the bank recover the funds?
Answer: The recipient has been enriched at the bank’s expense by mistake (an unjust factor). However, if the recipient can show they changed their position in good faith by spending the money irreversibly, the court may reduce or deny the bank’s claim.
What Makes Enrichment ‘Unjust’?
Not every enrichment is ‘unjust’ in law. The courts recognise certain ‘unjust factors’ that justify restitution. The most common are:
- Mistake: The claimant paid money or conferred a benefit by mistake (of fact or law).
- Failure of basis (failure of consideration): The reason for the payment or benefit fails (e.g. a contract is void, or the expected return does not materialise).
- Duress or undue influence: The benefit was obtained through pressure or exploitation.
- Other factors: Such as total failure of consideration, or payments made under compulsion.
Key Term: failure of basis
Where the reason or condition for conferring a benefit fails, so the defendant’s retention of the benefit is unjust.
Worked Example 1.2
A customer pays £100 in advance for a concert ticket. The concert is cancelled and no replacement is offered. Is the organiser unjustly enriched?
Answer: Yes. The organiser has been enriched at the customer’s expense, and the basis for the payment (the concert) has failed. The customer is entitled to restitution.
Defences to Unjust Enrichment
Even if the four elements are satisfied, the defendant may have a defence. The main defences are:
- Change of position: The defendant has spent or relied on the benefit in good faith, making repayment unfair.
- Estoppel: The claimant’s conduct led the defendant to believe they could keep the benefit.
- Legal justification: The law or a valid contract allows the defendant to retain the benefit.
Worked Example 1.3
A person receives an overpayment from a friend, realises the error, but spends the money on luxury goods after being told by the friend to keep it. Can the friend later claim unjust enrichment?
Answer: If the friend encouraged the defendant to keep the money, the defendant may have an estoppel defence and may not be required to repay.
Unjust Enrichment Compared to Contract and Tort
Unjust enrichment is distinct from contract and tort:
- Contract: Focuses on enforcing promises. Unjust enrichment applies where there is no valid contract, or the contract is void or unenforceable.
- Tort: Focuses on wrongful acts causing loss. Unjust enrichment does not require wrongdoing—only unjust retention of a benefit.
Key Term: restitution
The remedy requiring the defendant to return or repay the value of the benefit received.
Key Point Checklist
This article has covered the following key knowledge points:
- The four elements of an unjust enrichment claim: enrichment, at the claimant’s expense, unjust factor, and no defence.
- Enrichment includes money, goods, services, or discharge of a debt.
- ‘At the expense of the claimant’ requires a direct link between the claimant’s loss and the defendant’s gain.
- Unjust factors include mistake, failure of basis, and duress.
- Main defences include change of position, estoppel, and legal justification.
- Unjust enrichment is separate from contract and tort claims.
Key Terms and Concepts
- unjust enrichment
- enrichment
- at the expense of the claimant
- unjust factor
- change of position defence
- failure of basis
- restitution
