Unjust Enrichment

Introduction

**Unjust enrichment** is an independent cause of action that sits beside contract and tort: it **reverses an enrichment** gained by the defendant **at the claimant's expense** in circumstances the law regards as **unjust**. In contract-law problems it principally matters **after a contract has ended** — by **frustration**, by **breach**, by **failure of a condition**, or because it was **never binding** in the first place (e.g. void for mistake, ultra vires or incapacity). This chapter sets out the **four-stage test** confirmed in **Benedetti v Sawiris** [2013] UKSC 50, the recognised **unjust factors**, the rules on **valuing an enrichment**, the **direct-transfer rule** in **Investment Trust Companies v HMRC** [2017] UKSC 29, the principal **defences**, and how restitution interacts with the **Law Reform (Frustrated Contracts) Act 1943** and with termination for **repudiatory breach**.

Assessment focus

The SRA SQE1 FLK1 specification requires candidates to understand the **basic principles of restitution and unjust enrichment, particularly in the context of termination of contract**. For SQE1 you must know (i) the **four-stage test** confirmed by the Supreme Court in **Benedetti v Sawiris** [2013] UKSC 50; (ii) the main recognised **unjust factors** (mistake; total failure of basis; duress, undue influence and illegality; absence of authority / ultra vires; necessity); (iii) how enrichment is **valued** (objective market price, subjective devaluation, and the three exceptions that re-elevate the objective value); (iv) the **direct-transfer rule** for 'at the claimant's expense' (**Investment Trust Companies v HMRC** [2017] UKSC 29); (v) the principal **defences** (change of position, bona fide purchase); and (vi) how restitution interacts with the **Law Reform (Frustrated Contracts) Act 1943** and with termination for repudiatory breach. Questions are **single best answer questions (SBAQs)** that typically require you to **identify an unjust factor** on the facts and **apply the correct valuation rule**.

Study tips

1) Learn the **four-stage test** (enrichment; at claimant's expense; unjust factor; no defence) and remember the claimant proves (1)-(3) while the defendant proves any defence. 2) Identify the **type of benefit first**: money is always an enrichment at face value; services start at market value and may be **subjectively devalued**. 3) Memorise the **three exceptions** that re-elevate objective value — **request**, **free acceptance**, **incontrovertible benefit**. 4) For 'at the claimant's expense' apply the **direct-transfer rule** (Investment Trust Companies v HMRC); an intermediate recipient normally breaks the chain. 5) In **frustration** problems work through the **1943 Act** in sequence: s.1(2) money, the proviso for expenses (capped), s.1(3) valuable benefit, s.2(3) contractual provision. 6) For **change of position**, recall it protects **good-faith, extraordinary** expenditure and operates **pro tanto** (Lipkin Gorman).