Express Contract > Unjust Enrichment

Businesspeople always want certainty except when they do not.

So when a business deal goes wrong, the natural and desperate impulse is to throw every available theory at the other side such as unjust enrichment. The businessperson clings to the hope that the law will somehow save himself or herself. But the reality is very different. Absent fraud or other wrongdoing, an express contract governs the subject of the dispute. “Too bad, so sad” is what Courts universally rule.

This is a situation where the law makes sense. An express contract and an implied-in-law contract are mutually exclusive ways of describing the same relationship. If a written or oral agreement governs the subject, the parties’ rights and obligations come from that agreement. Period. A court will not superimpose an equitable remedy on top of a bargain the parties already struck, because doing so would let a party rewrite or escape the deal it made by recasting the claim as “unjust enrichment.”

There is an important wrinkle, which is where experienced and careful pleading matters. Unjust enrichment can survive as a genuine alternative when the existence, validity, or scope of the contract is itself in dispute. If one party denies that an enforceable contract exists at all, the other party may plead unjust enrichment in the alternative. The argument is simple: if there is no contract, then at least I should be paid the value of what I provided.

But once a valid express contract governing the subject is established, the alternative collapses, and only the contract claim remains. This is yet another reason why businesspeople should share all of their lingering doubts with their attorney. Because if the deal turns out to be a bad one, then it is important to have contract language to justify some sort of claim versus the hope of being saved by a Judge who has thousands of other cases on the docket.

David Seidman is the principal and founder of Seidman Law Group, LLC. He serves as outside general counsel for companies, which requires him to consider a diverse range of corporate, dispute resolution and avoidance, contract drafting and negotiation, real estate, and other issues. He can be reached at david@seidmanlawgroup.com or 312-399-7390. This blog post is not legal advice.