A contract usually lies at the center of any transactional dispute. And in such circumstances, the courts look to the contract to arrive at a remedy and make the damaged party whole again.
However, in certain circumstances, a party receives a benefit at the expense of another and there is no contractual relationship between them. These are nuanced and unusual areas of transactional law. In such circumstances, Texas courts employ the doctrine of “unjust enrichment.” In this guide, we will discuss the elements of unjust enrichment and how they are applied in Texas.
Common Law Unjust Enrichment
Texas law holds that unjust enrichment only exists where a contract does not. Therefore, if a contract (whether expressed or implied) exists between the parties, then the contract controls any dispute and unjust enrichment is not applicable to the case.
Elements Of Unjust Enrichment
That all said, the elements of unjust enrichment are:
- One party receives a benefit from another party,
- The benefit was conferred at the detriment to the other party, and
- There was no contract between the parties.
At the heart of an unjust enrichment cause of action is an unexpected benefit conferred by one party upon another without the proper payment for that benefit by the receiving party. This concept is rather hard to get a handle on, so an example of an unjust enrichment cause of action may be helpful.
Suppose Person A builds and delivers a high-performance bicycle to the home of Person B. However, the home is actually that of Person C. Person C accepts the bicycle and enjoys riding it. Since Person B never received the bicycle, they do not pay for it. Now Person A has delivered a bicycle but has not received payment. At this point, Person A has a claim against Person C for unjust enrichment (i.e., Person C has received the benefit of the bicycle to the detriment of Person A—they were never paid). Since there is no contract between Person A and Person C there is no breach of contract claim. However, there is a claim for unjust enrichment.
Texas courts use the concept of a “quasi-contract” to untangle such a situation. A quasi-contract is an obligation imposed by law as a matter of equity. In this example, there was a quasi-contract between Person A and Person C. Since Person C accepted and is enjoying the benefits of a high-performance bicycle, they should have to Pay Person A for the bicycle.
Quantum Meruit v. Unjust Enrichment
Very closely associated with unjust enrichment is the concept of “quantum meruit.” Quantum meruit occurs where a person confers a benefit on another and thereby has a reasonable expectation to compensation for that conferred benefit. Like unjust enrichment, where no contract exists, equity still demands that the befitting party pay for the benefit conferred.
The key distinction is that a quantum meruit case relies on a reasonable expectation of one party to receive compensation for a benefit conferred. Unjust enrichment seeks to prevent the injustice of receiving a benefit without paying for it.
Unjust Enrichment Is Not Fraud
You do not need deceit or ill intent for an unjust enrichment claim. Rather unjust enrichment frequently occurs due to a mistake or an unintended act. Therefore, the party receiving the unjust enrichment could have simply been the recipient of an unexpected boon. That said, Texas law requires that if they have willingly received a benefit then there should be restitution (i.e., they should pay for that benefit or return it).
Damages For Unjust Enrichment
The quasi-contract principal employed by Texas courts speaks directly to the equitable nature of an unjust enrichment claim. Equity is a demand for fairness. When a party delivers a service, they have a reasonable expectation to receive an exchanged benefit. Restitution is based on the receiving party’s gain rather than the delivering party’s loss. Therefore, in the case of the bicycle example, restitution could either be the return of the bicycle or payment for the bicycle.
Consult an Attorney
As you can see, unjust enrichment is a nuanced area of transactional law that requires skill in its identification. The Hunnicutt Law Group’s attorneys have decades of experience in all aspects of transactional law. If you feel that someone has received unjust enrichment in Texas at your expense, contact us today to see how we can get the equity under Texas law that you deserve.
J. Stephen Hunnicutt
Our founding attorney, Stephen Hunnicutt, set the precedent for a commitment to excellence and a focus on the client. With 25 years of experience, he has handled countless cases involving business litigation and commercial litigation. Over the years, Mr. Hunnicutt has worked as in-house counsel for a Fortune 500 energy company, a large firm, a small firm, and finally, in his own practice.
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