Unfair enrichment or undue payment are terms that may sound familiar if you have ever received income that was not due to you or, on the contrary, if you have had to make payments without a valid reason.
It is also a common argument used by insurance companies to avoid paying benefits to their clients.
In this article, we will explain everything you need to know to successfully deal with these situations.
What Is Unjust Enrichment and What Are the Requirements?
When we talk about unjust enrichment, we are referring to situations in which there is a transfer of property or other benefit without a justifiable reason. The result is that one of the parties is enriched and the other is impoverished. In other words, one person benefits at the expense of another.
However, this enrichment of one of the two parties can occur without malice. That is, intent or deliberation is not taken into account. Now, a person may acquire property or benefits because, for example, an administrative error has been made, and we would still speak of unjust enrichment.
This type of enrichment is also known as unlawful or illicit enrichment, because there is no legal justification for this transfer of assets, so we are talking about an act that is not legal.
The main problem in these cases is that it is a practice that is not provided for in any law. In some articles of the Civil Code we can find references or points that allow us to know how to act, but as we see in Art. 10.9 :
“In the case of unjust enrichment, the law under which the transfer of the patrimonial value in favour of the enriched person took place”.
So each case is a different world and so is the way to intervene. What is clear is that the party who benefits at the expense of the other has the obligation to replace and respond to what has been unjustly taken.
One of the typical examples of unjust enrichment is found in lease agreements where the tenant, despite being prohibited from doing so, rents or sublets to a third party and charges a higher rent than agreed with the landlord without the landlord’s knowledge and consent.
Until October 2015, the Civil Code provided that an action for unjust enrichment was time-barred after 15 years. From now on, this period is set at 5 years:
Art. 1964 of the Civil Code: ‘For personal actions not subject to a specific limitation period, the limitation period shall be five years from the date on which performance of the obligation can be demanded. In the case of continuous obligations to do or refrain from doing something, the period begins to run each time it is breached.
When Can Unjust Enrichment Be Assessed?
Given this lack of regulation, the question arises as to what conditions or circumstances must be met in order for unjust enrichment to exist in the eyes of the law.
Case law, i.e. the various judgments handed down by the courts, helps us to clarify this situation.
Thus, in order to exercise the action of unjust enrichment and to be able to return what is due to the injured party, it is established that a series of conditions or hypotheses must be met in order to recognise an unlawful act:
- That the defendant has been enriched. This may be in the form of monetary or patrimonial assets or any other advantage involving a significant benefit, such as the non-diminution of assets.
- That the plaintiff has suffered impoverishment as a result. This can vary from economic, patrimonial or even moral losses for this situation of advantage acquired by the defendant.
- That there is no cause for this displacement and acquisition of property.
- Or that there is a causal relationship or link between the enrichment and the impoverishment.
Another aspect that should not be overlooked is the fact that an action for unjust enrichment does not seek the return of the goods obtained to the impoverished party. Instead, the action is for equivalent financial compensation.