When a party enters into a business deal with another individual or company, it’s always best to have an enforceable contract in place. But in cases where a written agreement does not exist — or a contract is not legally enforceable for some reason — damages may still be recoverable if a party refuses to pay for the work that was performed. In the absence of a valid contractual agreement, a legal remedy may be sought by an aggrieved party under several legal theories, including quantum meruit, unjust enrichment, or promissory estoppel.
Unjust enrichment is a common cause of action brought in civil claims, such as those involving a breach of contract. It can arise in a number of situations in which a party has received a benefit to the other’s detriment. Under Illinois case law, to bring a claim for unjust enrichment, the retention of that benefit must have violated the “fundamental principles of justice, equity, and good conscience.” What makes the retention of the benefit unjust is typically due to improper conduct by the defendant.
Illinois courts are divided as to whether a claim for unjust enrichment can be brought alone or must be raised with other claims in a lawsuit. However, unjust enrichment is often asserted along with fraud, duress, undue influence, and quasi-contractual claims. Unjust enrichment is also a necessary precondition to a claim for restitution.
A constructive trust is typically the equitable remedy applied in unjust enrichment cases. By establishing a constructive trust, the court effectively imposes the duties of a trustee on the defendant and requires them to transfer property to the party who was supposed to receive it. While constructive trusts are not created by courts based on a violation of an agreement, they are imposed by a court when it is deemed fair.
Closely related to unjust enrichment is the legal doctrine of quantum meruit. Translated from the Latin for “as much as he deserves,” the theory is also based on the principles of justice and fairness. Specifically, it allows a party to recover compensation for the services they carried out, even if there was a contractual defect that makes suing for a breach of contract claim impossible.
A quantum meruit claim can be brought if the following elements are met:
Quantum meruit recovery is measured by the “reasonable value of work.” Even if a contract was executed between the parties, asserting this claim can help to ensure the plaintiff is paid in the event the agreement is unenforceable. In addition, a claim for quantum meruit may also exist when the work performed by the plaintiff is outside the scope of the contractual terms.
The theory of promissory estoppel applies in cases where one party makes a promise that the other relies on to their detriment. The elements required to plead promissory estoppel in a lawsuit include: (1) an unambiguous promise; (2) the plaintiff’s reliance on the promise; (3) the defendant expected or foresaw the plaintiff’s reliance on their promise; and (4) the plaintiff relied on the promise made by the defendant to their detriment.
It's always a good idea for a business owner to have a contract in writing to protect their interests. However, promissory estoppel is a mechanism that can help ensure a legal remedy is obtained in the absence of an enforceable agreement. In fact, this claim can only be made when no express contract exists — and there is no contractual consideration. Instead, promissory estoppel serves as a substitute for the consideration that would have been specified in the terms of the contract.
Business relationships are largely based on trust. If you have relied on another party’s promise to your detriment and suffered damages, it’s important to have a knowledgeable attorney by your side who can advise you regarding your legal rights and remedies. Located in Rolling Meadows, Litico Law Group provides skillful counsel and dedicated legal services in Illinois for a wide variety of business disputes, including those involving claims for unjust enrichment, quantum meruit, and promissory estoppel. We welcome you to contact us at (847) 307-5942 to schedule a consultation to learn how we can help.