What is unjust about unjust enrichment?

Once your chat in a posh drinks reception is not upheld as a contract, you might want the court to consider if you are entitled to some money on the basis of ‘unjust enrichment’.

A claim for unjust enrichment is not a claim in contract law, but in a much older branch of English law called equity. To succeed, you need to establish:

  1. the recipient was enriched (received a benefit)
  2. the enrichment was ‘at your expense
  3. the enrichment was unjust
  4. there is nothing to prevent the recipient paying (there are limited defences such as public policy).

In a typical construction scenario, the first three criteria are satisfied and the limited defences are rarely relevant.

After the drinks reception

Moorgate Capital (a company specialisting in advice for mergers and acquisitions) allegedly providing services to HIG European relating to the acquisition of a company called Bezier.

If the absence of a clear contract for those services, Moorgate claimed for quantum meruit on the basis of unjust enrichment.

The court said that any enrichment was not unjust because neither party understood that the work would attract a fee (although Moorgate clearly hoped it would) – the parties did not assume a contract would materialise.

…the nature of the case is inherently speculative from the point of view of the adviser and is regulated by freedom of contract and enlightened self-interest on the part of both parties

Moorgate could have contracted for its services, but it didn’t. The court also said it ought not to be quick to suppose that commercial parties who are well able to make contracts with each other expect payment to be made in the absence of a contract. In other words, if you should have had a contract (but didn’t) then the courts will not make one for you.

Moorgate could have declined to provide any services, but it didn’t.

Moorgate unilaterally took a risk that it may not get paid. That was not enough for a claim for unjust enrichment.

What should you do?

Do not rely on equity to come to your aid if you find yourself in the quicksands of working without a contract.

Agree, record, sign and only then start work.

Cases: Test set out in Benedetti v Sawiris [2013] USKC 50; Moorgate Capital (Corporate Finance) Ltd v H.I.G. European Capital Partners LLP [2019] EWHC 1421;

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