Unjust enrichment is a legal doctrine that arises when one party unfairly benefits at the expense of another. It occurs in situations where retaining the benefit would be inequitable without compensating the disadvantaged party.
The key elements of unjust enrichment are:
- Enrichment – One party must receive a benefit or an increase in value.
- At the expense of another – The benefit must come at the expense of another party.
- Unjustness – The retention of the benefit must be unjust, implying that the enriched party should compensate the other party to avoid unfairness.
The principle of unjust enrichment is vital in maintaining fairness in business and legal transactions. It ensures that one party does not unfairly gain from another’s actions without a legitimate legal basis, preventing situations where enrichment is derived from wrongful or inequitable conduct.
Although the Malaysian Contracts Act 1950 does not provide a standalone provision specifically titled “unjust enrichment” its principles are nevertheless embedded in the legal system, particularly in relation to quasi-contracts (also known as implied contracts). Quasi-contracts arise in situations where there is no formal agreement between parties but where one party is nonetheless enriched at the expense of another, thus necessitating compensation.
A clear legal foundation addressing unjust enrichment is in Section 70 of the Contracts Act 1950 that requires a person who benefits from something received by mistake or under duress to return the benefit or repay it.
Section 70 states: “A person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it.”
This provision helps address unjust enrichment in cases where there is no formal contract but where one party benefits at another’s expense due to circumstances like error or force.
Application in Court
Malaysian courts have recognized unjust enrichment principles in a variety of cases, particularly those involving transfer of money or property without an agreement, or situations where one party wrongfully gains an advantage over the other. In such cases, the courts ensure that restitution is made, aiming to restore the aggrieved party to their original position and prevent the unjust retention of benefits.
In such cases, the courts will look for situations where:
- A benefit was conferred on the defendant.
- The benefit was conferred by mistake, duress, or without the plaintiff’s consent.
- The goods/services were provided out of necessity and the defendant unjustly retains the benefit
- The defendant is aware of the situation, and it would be inequitable to allow him to retain the benefit.
In conclusion, while unjust enrichment is not specifically named in Malaysian law, it is firmly integrated into the legal system through Section 70 of the Contracts Act 1950 and recognized case laws. This doctrine ensures fairness and prevents inequitable enrichment, even in situations without formal contracts.
By providing restitution, Malaysian law upholds fairness and prevents one party from unjustly benefiting at the expense of another, reinforcing equity in legal transactions.
