Unjust Enrichment

Unjust enrichment is a legal term that refers to a person receiving benefits at the expense of another with no legal justification.

For example, a person has worked hard for a financial gain and when the job is completed, the payment is received or intercepted by another party who refuses to give the money back to the person who delivered the service.

People who have benefited from unjust enrichment are often connected somehow with the aggrieved party. This is how they have managed to insert themselves into the transaction.

It can sometimes be related to fraud.

For example, a mortgage broker successfully helped a home buyer obtain a home loan and the facility letter was accepted by the borrower. By right the commissions for the referral loan would be paid to the broker. But somehow the property agent of the new owner managed to convince the bank that the commissions should be paid to him. Believing the words of the agent, the bank disburse the funds to the agent instead of the broker.

In this case, the victim of unjust enrichment is the broker, and the party receiving financial gains and unjustly enriched is the agent.

We could point fingers at whether the mistake was made by the banker or that the agent behaved unethically. But the point is that the rightful receiver of the referral fees was the broker and he did not receive the payment. The payment was in fact received by a person who had no justification at all for claiming the funds.

In this situation, a case can be made in favour of the broker and restitution is ordered.

Restitution is the legal jargon for saying that the money has to be returned to the rightful owner.

Another example might be that a company is selling shares to raise funds. It hired brokers to sell a certain number of shares at $1 per share. But without the permission of the company, the brokers secretly sold the shares at $1.50 a piece to investors and pockets the $0.50 for each share themselves. This is downright despicable actions taken by the brokers and could be charge if discovered.

Unjust enrichment is unfortunately a common place in the modern business environment.

This can often be observed when money or assets transferred to third parties that were supposed to be held in confidence are transferred to other places illegally.

For example, a payment made to a promoter of a property development that is meant as payment for a unit. The promoter than take the money and disappears without a trace. Resulting in the developer not receiving the funds required for working capital, and the property buyer losing his money.

Such examples are disturbingly regularly featured in mainstream media.

It must be noted that like everything associated with law and regulations, certain criteria has to be met in order for unjust enrichment to be present.

A lack of consent for example, can sometimes be an unjust factor as well.

When in doubt, it is best to consult a lawyer about such issues.

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