Learning Outcomes
After studying this article, you will be able to identify when a claim for unjust enrichment or quantum meruit arises, explain the legal requirements for such claims, and apply the principles to practical scenarios. You will also be able to distinguish quantum meruit from contractual remedies and understand the main defences available to unjust enrichment claims for SQE1 purposes.
SQE1 Syllabus
For SQE1, you are required to understand the principles and application of unjust enrichment and quantum meruit claims. Focus your revision on:
- 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
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 required to establish a claim for unjust enrichment?
- In what circumstances can a party claim quantum meruit for services rendered?
- How is the value of a quantum meruit claim generally assessed by the courts?
- 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: 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.
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.
The Four Elements of Unjust Enrichment
To succeed in a claim for unjust enrichment, the claimant must prove all of the following:
- The defendant has been enriched (received a benefit).
- The enrichment was at the claimant’s expense.
- The enrichment was unjust (there is a recognised unjust factor, such as mistake, failure of consideration, or duress).
- There is no applicable defence or legal justification for the defendant to retain the benefit.
Key Term: enrichment
The receipt of a benefit, such as money, goods, services, or the discharge of a liability.Key Term: quantum meruit
A claim for reasonable payment for services provided, literally meaning "as much as is deserved" in Latin.
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.
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.
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.
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.
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.
- 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.
- 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.
- Limitation: Claims for unjust enrichment are subject to statutory limitation periods (generally six years from accrual of the cause of action).
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.
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.
Key Terms and Concepts
- unjust enrichment
- enrichment
- quantum meruit
- restitution
- change of position
- bona fide purchaser
