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Court awards money to prevent injustice

Have you ever done something that benefits another person with the expectation that you will get something in return? Sometimes, unfortunately, even when the other person is aware of your expectations, he or she does not follow through. What remedies do you have?

Courts will inevitably start by looking at whether the parties have an express contract in place. A contract that lays out the exchange of promises between the parties and what their expectation are.

The existence of a written contract, which is always your best option, will help support a breach of contract claim and generally allows a court to award “expectation” damages. Expectation damages are money damages intended to make the non-breaching party whole. In other words, money damages that more or less will give the non-breaching party what he or she expected from the contract.

But a written contract does not always exist. And if that is the case, then the equitable doctrine of unjust enrichment comes into play. The doctrine allows courts to imply a contract “in order to prevent unjust enrichment when one party inequitably receives and retains a benefit from another.”

Recently, the Michigan Court of Appeals affirmed the decision of a trial court that, after a bench trial, awarded the plaintiff $10,600 plus interest and costs under the doctrine of unjust enrichment.

That case involved a person who had an oral agreement to live at a property rent-free with the understanding that he will pay the homeowners’ insurance and property taxes. There was also another oral agreement for him to purchase the home eventually.

Because the home was in a bad condition, he made various improvements. Long story short, when it came time to closing the “deal” and purchasing the home, the parties did not agree on a price. Accordingly, the plaintiff did not pay the insurance or taxes on the home as promised, and he was eventually evicted and the home sold to someone else.

A lawsuit was filed by the person evicted to recover the money he put as a down payment and for the value of the improvements he made. The court ultimately awarded him money, but not the full amount he claimed because of his own conduct.

This case highlights three important things.

First, as much as possible, you should put agreements in writing. Second, even when there is no express contract, you might have a plausible unjust enrichment claim. Finally, your own conduct can reduce the money damages you are claiming, and sometimes even completely bar them under the doctrine of unclean hands.

Click here to access the full opinion of the court, and please feel free to contact us if you have any questions about this blog or other legal matter.

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