In some situations, the doctrine of unjust enrichment lets you sue for non-payment, even without an enforceable contract. This article will discuss what unjust enrichment is, how the doctrine works, and why it’s still better to rely on an enforceable contract.
When Can You Sue For Non-Payment Under Unjust Enrichment?
The doctrine of unjust enrichment operates in the absence of an actual contract. It allows a court to impose an equitable duty to pay (called a “quasi-contract”) to prevent unjust enrichment.
In business debt collections, it lets you sue for non-payment when you confer a benefit on the customer with the expectation of payment, where keeping the benefit without paying you would be unjust.
For example, let’s say the Customer tells the Supplier it’s going to place an order, but never actually does so, and the Seller then sends a delivery. There’s no actual contract, and the Customer can refuse the delivery without liability, but it can’t keep the goods without paying for them. Under those circumstances, a Court would likely impose a duty on the Customer to pay.
Why Is It Better To Sue For Non-Payment Under Breach Of Contract?
While unjust enrichment is a good backup position, there’s no substitute for an actual contract.
Breach of contract is more objective than unjust enrichment because liability and damages derive from the agreement itself. In quasi-contract, liability depends on the Court’s sense of fairness, and because there’s no contract price, damages are whatever the Court considers a reasonable value.
While breach of contract is a stronger theory in business debt collections, if you don’t have a contract, or if enforceability is in question, unjust enrichment gives you another basis to sue for non-payment.
For more information on business debt collections and using unjust enrichment to sue for non-payment, or if you’d like to discuss a specific collection issue, call me at 856-667-1669 or contact me here.
This material is for informational purposes only and should not be construed as legal advice. No person should rely on this information without seeking the advice of an attorney.