Contracts II Outline

Outline
Sunday, February 15, 2009
4:37 PM
12. Obligation Based on Unjust Enrichment and Material Benefit
I. Unjust Enrichment
1. The Relationship between Unjust Enrichment and Contract
·        Separate theory of liability
§              Can be brought separately or concurrently with other theories (K or PE)
·        Equitable theory
·        Sometimes circumstances have nothing to do with the K at all
·        NOT based on a promise
·        NOT promissory theory but often brought with promissory estoppel
·        If K then NO unjust enrichment
2. Elements
1. One party is Enriched by another
§         Not ALWAYS unjust for a person to keep a benefit without payment
·         i.e. gratuitous gift
2. Unjust for the beneficiary to keep the benefit without compensating the other
3. Terminology
·        Unjust Enrichment: quantum merit, quasi K or K implied in law
§              Don’t mix up with K implied in FACT: a valid K
4. The Distinction Between Factually and Legally Implied K
·        Words = express contract
·        Conduct (& circumstances) = IMPLIED in FACT K: actual K which arises where the parties agree upon obligations and it is their intentions instead of words that create the K
·        NO K but LIABILITY = PE OR Unjust Enrichment
·        Martin v. Little Brown (1981)
§              Facts: Martine gave Little facts that someone plagiarized their books and wanted a reward
§              Volunteers have NO right to restitution
§              It must be shown BY THE FACTS that a person wrongly secured a benefit that would be unconscionable to retain
·                    NOT a subject test
·                    NO promise so NO PE
·                    It would be different IF it was CUSTOMARY for the person giving the info to be compensated (special service)
§              Example: If it was a plumber who called and said “I fix pipes” and fixed your pipes but with NO estimate
§              Modern theory: a implied K in fact – would come up with a reasonable price determined by market value
§              Classical theory: there would likely not be a K – essential terms are missing
·                    NO claim under P.E. b/c NO promise
·                    Plumber NOT volunteer b/c intent to charge and go through the other branches of the unjust enrichment tree on the slide
·        Feingold v. Pucello (1995)
§              Facts: Pucello in a car accident and F gave him a name of a doctor and started doing work on the case without ever discussing a $. When P found out about F’s prices, P didn’t want F’s services
§              F was an officious intermeddler b/c P never asked for F’s services
§              Part performance takes this out of the statute of frauds
§              Clean hands doctrine: you action should be moral or on pare with CUSTOMARY standards
·                    In EQUITY there is a greater ability for the court to take this into question
5. Volunteers and Intermeddlers
·        Volunteer
§              Does not expect to be reimbursed
§              Have NO right to restitution
§              To see if someone is a volunteer – look to the OUTWARD manifestations
·        Officious Intermeddler
§              May expect reimbursement BUT the circumstances do not justify reimbursement (b/c they were NOT asked for)
·                    The courts do NOT encourage this
·        Estate of Cleveland v. Gordon (1992)
§              Facts: Gordon took care of sick aunt but was NEVER close with the aunt and only took care of her b/c no one else would. After C. died, G. asked to be reimbursed for money spent
§              A moral obligation or duty CANNOT be legally enforced
§              Family members are generally NOT entitled to recover for services provided to their close relatives
·                    EXCEPTION: if a family member can show proof of the agreement to pay back for services provided then they CAN collect
·                    Policy: commercial commerce would expel the mutual kindness that family should show to each other
§              NO PE b/c no clear and definite promise
·         Remedy:
§              Restitution: remedy where the court awards “disgorgement” of the value of what was received based on unjust enrichment claim
·                    NATURE OF THE REMEDY IS IMPORTANT
·                    Restitution is based on a theory of disaffirmance
·                          WHY: does the P wish to pursue a claim in K and seek expectations damages (an other consequential damages) OR disaffirmed the K and see unjust enrichment (or reliance) damages
·                    If a K has been breached and the D gained a benefit for the P, the P may choose to pursue restitution rather than expectation damages
§              In order to determine money judgment of the value of the item or service – this is done by determining the market value of the good: Quantum Meruit
·                    specific restitution is like specific performance
§              Expectation damages mean a contract is recognized
II. Application of Unjust Enrichment Principles to Promises for Past Benefits: The “Moral Obligation” and “Material Benefit” Doctrines
o                         There is NO promissory basis
o                         A promise is enforceable as a K ONLY if it was given in exchange for a legal detriment
II. Moral Obligation
o                         Def: a promise made in recognition of a prior detriment that is NOT support by consideration
·                                Must be a person acting WITHOUT gratuitous intent that confers a benefit to another
·                                Some don’t