Unjust enrichment - Quantum meruit claims

Learning Outcomes

This article outlines the core doctrinal and exam skills required to handle unjust enrichment and quantum meruit questions for SQE1. It explains when unjust enrichment and quantum meruit claims arise in practice, the four elements of the cause of action, and how to identify enrichment and the 'at the claimant’s expense' requirement in problem scenarios. It details the main unjust factors, focusing on mistake, failure of consideration (basis), duress and related vitiating factors, and shows how total failure of consideration operates in money claims. It analyzes the measure and valuation of restitution, emphasising market value under Benedetti v Sawiris and statutory valuation under the Law Reform (Frustrated Contracts) Act 1943, including the two-stage test under section 1(3). It distinguishes restitutionary quantum meruit from contractual payment claims and from other remedies such as rescission. It reviews key defences—especially change of position, bona fide purchaser, estoppel, illegality and limitation, including postponement for mistake under section 32 of the Limitation Act 1980. It also presents practical pleading and exam-application points so you can structure clear, stepwise answers to SQE1 multiple-choice questions.

SQE1 Syllabus

For SQE1, you are required to understand the principles and application of unjust enrichment and quantum meruit claims, with a focus on the following syllabus points:

• the elements required to establish a claim for unjust enrichment
• when quantum meruit claims arise, including in the absence of a contract or where a contract is unenforceable
• the calculation of reasonable remuneration for services provided
• the main defences to unjust enrichment claims, such as change of position and bona fide purchaser
• the distinction between contractual and restitutionary remedies
• failure of consideration (also called failure of basis), including the requirement of total failure for recovery of money paid
• valuation and awards in frustration under the Law Reform (Frustrated Contracts) Act 1943, especially section 1(3)
• interaction of unjust enrichment with rescission (e.g. after misrepresentation) and with illegality
• limitation for unjust enrichment claims, including postponement for mistake under section 32 of the Limitation Act 1980
• pleading and proving enrichment, “at the expense of,” unjust factor, and valuation (e.g. market rates, deducting payments already made)

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.

1. What are the four elements required to establish a claim for unjust enrichment?
2. In what circumstances can a party claim quantum meruit for services rendered?
3. How is the value of a quantum meruit claim generally assessed by the courts?
4. Name two common defences to a claim for unjust enrichment.

Introduction

Unjust enrichment and quantum meruit claims provide remedies where one party has received a benefit at another’s expense in circumstances where it would be unjust to allow retention of that benefit. These claims are important in situations where no contract exists, a contract is void or unenforceable, or a contract has been terminated but services or goods have already been provided. For SQE1, you must be able to identify when these remedies are available, the requirements for a successful claim, and how the courts assess the value of such claims.

Unjust enrichment operates as a free-standing cause of action, distinct from contractual damages and tortious recovery. It frequently arises after a contract has been set aside (for example, rescission for misrepresentation or duress) or where consideration has totally failed. Restitution aims to reverse unjust enrichment by restoring the parties to the position they should be in: the recipient gives up the gain obtained without legal basis, usually by repayment or returning the benefit received.

Key Term: unjust enrichment
A legal principle requiring a person who has been enriched at another’s expense, in circumstances deemed unjust, to make restitution.

The modern law recognises unjust enrichment as a distinct cause of action, separate from contract or tort. It is used to prevent a person from retaining a benefit where it would be unfair or without legal justification to do so.

Unjust Enrichment: The Basic Principle

Unjust enrichment is a restitutionary cause of action. It requires a party who has been unjustly enriched at another’s expense to make restitution, usually by repaying or returning the benefit received.

The remedy is typically personal (a money claim), though in some circumstances proprietary remedies may be relevant when identifiable property or its traceable proceeds are involved. For SQE1 purposes, focus on personal claims to repay money or pay a reasonable value for non-money benefits. Enrichment includes not only receipt of money or goods, but also discharge of liabilities and savings of expense. The claimant must link the enrichment to their expense—there must be a sufficient connection between the claimant’s provision and the defendant’s gain.

Key Term: enrichment
The receipt of a benefit, such as money, goods, services, or the discharge of a liability.

Key Term: failure of consideration
A recognised unjust factor where the basis of a transfer wholly fails (e.g. money paid for a purpose or performance that never materialises), justifying restitution.

Key Term: mistake
A recognised unjust factor where a payment or transfer is made under a mistake of fact or law, entitling recovery unless a defence applies.

Key Term: duress
Pressure (including economic duress) that illegitimately compels a transfer or agreement; payments made under duress may be recoverable in restitution.

Key Term: quantum meruit
A claim for reasonable payment for services provided, literally meaning "as much as is deserved" in Latin.

The Four Elements of Unjust Enrichment

To succeed in a claim for unjust enrichment, the claimant must prove all of the following:

1. The defendant has been enriched (received a benefit).
2. The enrichment was at the claimant’s expense.
3. The enrichment was unjust (there is a recognised unjust factor, such as mistake, failure of consideration, or duress).
4. There is no applicable defence or legal justification for the defendant to retain the benefit.

These elements frame the analysis:

• Enrichment can be direct (e.g. receiving money) or indirect (e.g. discharge of a debt). The court examines whether the benefit actually increased the defendant’s position, including preventing a loss.
• “At the claimant’s expense” requires a causal and transactional link. For example, if the claimant pays the defendant’s creditor and thereby discharges the defendant’s liability, the enrichment is at the claimant’s expense.
• The unjust factor depends on recognised grounds. Common ones include mistake of fact or law (including payments to public authorities later held unlawful—see Woolwich-type claims), failure of consideration (also described as failure of basis), duress (including economic duress), undue influence, and payments under compulsion. Total failure of consideration is generally required to recover money paid for a promised performance, unless the contract is divisible or the parties’ agreed basis fails in full.
• Absence of a defence is essential. Key defences include change of position, bona fide purchaser for value without notice (relevant in proprietary contexts), estoppel, and illegality (assessed on policy principles).

Worked Example 1.1

A mistakenly pays £5,000 to B, believing B is owed the money. B is not entitled to the funds but refuses to return them. Can A recover the money?

Answer:
Yes. B has been enriched at A’s expense by mistake, which is a recognised unjust factor. Unless B can establish a defence, A will be entitled to restitution.

Quantum Meruit: When Is It Available?

Quantum meruit claims arise where a party seeks reasonable payment for services provided, usually in the absence of a valid contract or where a contract does not cover the work done. The aim is to prevent unjust enrichment by ensuring the recipient pays a fair value for the benefit received.

Quantum meruit claims commonly arise in the following situations:

• Where services are provided in anticipation of a contract, but no contract is concluded.
• Where a contract is void, voidable, or unenforceable, but one party has already provided services or goods.
• Where a contract is terminated before completion, but part performance has been accepted by the other party.
• Where work is done outside the scope of an existing contract.

In addition:

• Where an appointment or agreement is void for formal reasons (e.g. failure to comply with required formalities), a party who has nonetheless rendered services may recover a reasonable sum. An example is a manager working under a void appointment recovering reasonable remuneration for services actually provided.
• In frustration, quantum meruit-like recovery is governed by statute. The Law Reform (Frustrated Contracts) Act 1943 permits recovery of money paid (section 1(2)) and a “just sum” up to the value of a non-money benefit conferred before frustration (section 1(3)). This involves identifying the defendant’s benefit and then assessing a just sum, reflecting the circumstances of frustration.

Key Term: restitution
The return or repayment of a benefit received, to prevent unjust enrichment.

Worked Example 1.2

Cleveland Bridge asks British Steel to begin manufacturing steel components while contract negotiations are ongoing. No contract is ever finalised, but British Steel delivers the components, which are used by Cleveland Bridge. Can British Steel claim payment?

Answer:
Yes. British Steel can claim quantum meruit for the reasonable value of the steel components supplied. Cleveland Bridge has been enriched at British Steel’s expense, and it would be unjust for them to retain the benefit without payment.

Non-contractual quantum meruit requires either a request for services or free acceptance of benefits such that it would be unjust to retain them without payment. Where the recipient did not request or accept the services, or the claimant was officious (imposing benefits unasked), recovery is unlikely.

Worked Example 1.1a

A building contract is frustrated by a flood after the contractor completes 40% of the works. The employer’s property reflects the partial improvement. Can the contractor recover a reasonable sum?

Answer:
Yes, but under the Law Reform (Frustrated Contracts) Act 1943. Under section 1(3), the court identifies and values the benefit to the employer (the partial improvement) and then awards a just sum not exceeding that value, taking into account the circumstances of frustration. The award is capped by the value of the benefit conferred.

Worked Example 1.2a

D is appointed as managing director under a contract later found void for non-compliance with statutory formalities. D nonetheless works for three months, improving company operations. The company refuses to pay. Is D entitled to payment?

Answer:
Yes. Even if the appointment is void, D may recover on a quantum meruit basis for services actually provided and accepted, to avoid unjust enrichment by the company.

Worked Example 1.1​

A contractor performs “extras” outside the original scope of a fixed-price contract at the principal’s request, without agreeing a price. The principal benefits but refuses to pay beyond the lump sum. Can the contractor recover more?

Answer:
Yes. For work outside the contractual scope requested and accepted, the contractor can claim a reasonable sum on a quantum meruit. The original contract price does not govern the extras.

How Is Quantum Meruit Assessed?

The value of a quantum meruit claim is usually the objective market value of the services or goods provided, not the subjective value to the recipient. The courts will consider:

• The standard market rate for similar services or goods.
• The actual benefit received by the defendant.
• Any express or implied agreement as to payment.
• The conduct of both parties.

The leading authority is Benedetti v Sawiris [2013] UKSC 50, where the Supreme Court confirmed that the starting point for valuation is the objective market value of the benefit conferred. Evidence of market rates, comparable transactions, and expert valuation assists. The courts will deduct sums already paid to avoid double recovery and will not normally exceed the value of the benefit actually obtained by the defendant. Where parties negotiated a price for the same services, those negotiations may be indicative of value but do not necessarily cap recovery unless clearly intended.

In statutory frustration cases, the Law Reform (Frustrated Contracts) Act 1943 section 1(3) requires a two-stage approach: first, identify and value the defendant’s benefit (often the end product of the claimant’s services, such as the improvement to a building), and second, award a just sum up to that value, considering the circumstances of the frustration (including losses caused by the frustrating event). This means the court focuses on the product of the services (where there is an end product) rather than merely the fact that services were rendered, and the award cannot exceed the value of the benefit at the time of frustration.

When assessing reasonable remuneration, courts can take into account:

• Whether the claimant’s performance matched the requested or accepted scope.
• Whether defects or incomplete performance reduce the benefit’s value.
• Market discounts or premiums relevant to urgency, specialist skill, or risk.
• Any prior payments or allowances (these are deducted from the assessed value).

Worked Example 1.3​

A decorator paints a house for a client, but the contract is later found to be void for illegality. The client refuses to pay. Can the decorator recover anything?

Answer:
The decorator can claim quantum meruit for the reasonable value of the work done, as the client has received a benefit and it would be unjust for them to retain it without payment.

When illegality is in issue, courts weigh policy considerations (following Patel v Mirza) to decide whether restitution would stultify the law or whether fairness supports recovery. Where the claimant seeks only to unwind an unjust gain (rather than enforce an illegal bargain), recovery is more likely if it does not undermine the purpose of the prohibition.

Defences to Unjust Enrichment

A defendant may resist a claim for unjust enrichment by raising certain defences:

Key Term: change of position
A defence where the defendant has changed their circumstances in good faith, relying on the benefit received, so that requiring restitution would be unfair.

Key Term: bona fide purchaser
A person who acquires property for value and in good faith, without notice of another’s claim, and who may be protected from restitution claims.

• Change of Position: If the defendant has spent or otherwise changed their position in reliance on the benefit, and it would be unfair to require repayment, the court may reduce or deny restitution. The defence requires good faith and a causal link between receipt and the change; it is often partial, tailoring the award to fairness.
• Bona Fide Purchaser: If the benefit has been transferred to a third party who acquired it for value, in good faith, and without notice of the claimant’s rights, restitution may be denied (particularly where proprietary claims are in issue). For personal money claims, this defence is less directly applicable; change of position typically provides protection to innocent recipients downstream.
• Estoppel: If the claimant’s conduct led the defendant to believe they could keep the benefit, and the defendant relied on this to their detriment.
• Illegality: If the benefit was conferred under an illegal contract, the court may refuse restitution. Modern analysis considers whether recovery would harm the integrity of the law (e.g. legitimising prohibited conduct) versus whether denying recovery would confer a windfall on the defendant.
• Limitation: Claims for unjust enrichment are subject to statutory limitation periods (generally six years from accrual of the cause of action). Where the unjust factor is mistake, the limitation period may be postponed until the claimant discovered or could reasonably have discovered the mistake (Limitation Act 1980, section 32).

Additional points:

• Passing-on is not a defence: the fact that the claimant may have recovered from or passed the cost to others does not usually defeat unjust enrichment.
• Counter-restitution: In some cases, if the claimant cannot restore what they received (e.g. benefits under a rescinded contract), restitution may be adjusted. However, inability to make precise counter-restitution does not necessarily bar recovery; courts can make allowances to achieve fairness.

Worked Example 1.2​

E receives £10,000 paid by mistake and, in good faith, donates £8,000 to a charity and uses £2,000 to pay an overdue utility bill. Upon discovering the mistake, the payer sues for the full amount. How might E’s liability be assessed?

Answer:
E can plead change of position. The £8,000 charitable donation, made in good faith and causally linked to receipt, may be irrecoverable as requiring repayment would be unfair. The £2,000 used to discharge E’s own liability represents a retained benefit and is likely recoverable. The court may tailor the award accordingly.

Exam Warning

For SQE1, be careful to distinguish between a claim for quantum meruit (restitutionary, based on unjust enrichment) and a claim for payment under a contract (contractual). If a contract exists and covers the work, the claim is for the contract price, not quantum meruit.

Where a contract governs price and scope, the remedy is contractual. Quantum meruit becomes relevant when there is no concluded contract, the contract is void or rescinded, the agreed basis fails (e.g. total failure of consideration), the contract is frustrated (triggering statutory rules), or the work is outside contractual scope. Also be alert to the total failure requirement when seeking to recover money paid: if some of the agreed basis has been received, the claim may fail unless the contract is severable or the received performance falls outside the agreed basis.

Key Point Checklist

This article has covered the following key knowledge points:

• Unjust enrichment requires enrichment, at the claimant’s expense, an unjust factor, and no defence.
• Quantum meruit allows recovery of reasonable value for services where no contract exists or a contract is unenforceable.
• The value of a quantum meruit claim is generally the objective market value of the benefit provided.
• Defences include change of position, bona fide purchaser, estoppel, illegality, and limitation.
• Quantum meruit is not available where a valid contract governs the payment for the work done.
• Failure of consideration (basis) commonly supports restitution for money paid where the agreed basis wholly fails.
• In frustration, section 1(3) of the Law Reform (Frustrated Contracts) Act 1943 requires identification and valuation of the defendant’s benefit, followed by an award of a just sum up to that value.
• Market valuation starts with Benedetti v Sawiris; deduction of sums already paid prevents double recovery.
• Limitation is generally six years; for mistake, time can be postponed until discovery under section 32 of the Limitation Act 1980.

Key Terms and Concepts

• unjust enrichment
• enrichment
• quantum meruit
• restitution
• change of position
• bona fide purchaser
• failure of consideration
• mistake
• duress