The last few blog posts have been about the elements of a contract: offer, acceptance, and consideration. So what happens if the contract fails? The offer was insufficient, the acceptance was not valid, or there was no consideration? If one party has still incurred some legal detriment is he or she without legal recourse? Not necessarily.
Nevada recognizes a cause of action for unjust enrichment, which allows a party to divest another of the benefit conferred but never paid for. In fact, recovery for unjust enrichment is mutually exclusive with recovery for breach of contract. If there is a valid contract, there is no unjust enrichment, and vice versa. It is not uncommon to see them both alleged in a contract, but a party cannot recover for both for the same transaction.
The elements of unjust enrichment in Nevada are the following:
- a benefit conferred on the defendant by the plaintiff;
- appreciation of the benefit by the defendant;
- acceptance and retention of the benefit by the defendant;
- in circumstances where it would be inequitable to retain the benefit without payment.
This circumstance arises in situation where there was intended to be a contract, but for some legal reason it fails, or where there was a contract, but not between the the two parties implicated.
For example, if Person A offers to pay Person B if Person B mows Person A’s lawn, no contract has been formed because one of the critical terms is missing—the payment amount. Thus, there is an indefinite promise, which does not amount to an offer.
If Person A mows Person B’s lawn without having discussed the price, Person B cannot recover from Person A for breach of contract because there was no contract. However, Person B can still recover for the reasonable value of her services. This is unjust enrichment.
Person A accepted and appreciated the benefit of Person B’s work—the lawn has been mowed. And it would be unjust not to require Person A to pay Person B for the work. Thus, Person B is entitled to payment. The amount of payment will depend on what it costs in the community for similar services.
That’s not to say you can go around providing unsolicited services and then sending a bill. This is called officious intermeddling, and constitutes enrichment, but not unjust enrichment.
Take another example. The owner of some raw land wants to build a home. He contracts with a developer to build the home. The developer, in turn, contracts with several subcontractors—plumbers, painters, carpenters, electricians, etc. These subcontractors have contracts with the developer, but not with the owner. If the owner fails to pay the developer, and the developer in turn fails to pay the subcontractors, then the developer has a claim for breach of contract against the owner, and the subcontractors have a claim for breach of contract against the developer. However, the subcontractors do not have a claim for breach of contract against the owner.
The subcontractors can still bring a claim against the owner for unjust enrichment, though. The owner has benefitted by the subcontractors’ work, and it would be unjust not to require payment to the subcontractors even if they never entered into an agreement directly with the owner. Again, the value recoverable will depend not on the terms of the individual contracts, but on the value of the benefits conferred. (The subcontractor still has claims for the contract value against the developer, and to the extent it can only recover part of the value from the owner, the developer may still be liable for the difference—and the owner will still be liable to the developer for the amount agreed to in the contract.)
Even if you don’t have legal recourse in contract, you may still have enforceable rights.
Zachariah B. Parry is an attorney and founding partner at the law firm Parry & Pfau and is an adjunct professor who teaches torts, contracts, and Nevada practice and procedure for UNLV’s paralegal program. He can be reached at 702-912-4451 or [email protected].