The Law of Unjustified Enrichment

By 5th September 2023Criminal Law
unjustified enrichment

South African law provides that a person should, in principle, be entitled to institute an action for compensation where their estate was impoverished without justification. An example is instances where one person transfers electronic funds into the incorrect bank account and the enriched person then receives and uses the money. This commonly occurs in situations involving a breach of contract where one party begins providing goods or services with the expectation of being paid.

Unjustified enrichment is a common law rule, however, in the case of Kudu Granite Operations (Pty) Ltd v Caterna Ltd the courts reiterated the requirements for unjustified enrichment.

The Defendant was enriched

  • If there was no act that resulted in the enriched person’s obtaining wealth or an act which led to the enriched person’s estate not decreasing but to the detriment of the impoverished person. Unjustified enrichment is based on the philosophical foundations of justice and fairness and is concerned not only with the transfer of the benefit but also with retaining the benefit.

The Plaintiff was impoverished

  • Assets must either drop or remain unchanged. Alternatively, liabilities must either increase or remain unchanged. Every enrichment activity must consider both the enrichment of one party and the impoverishment of the other party.

Defendant’s enrichment was at the expense of the Plaintiff

  • There must be a causal link between enrichment and impoverishment. The enrichment must be at the expense of the impoverished person.

The enrichment was without legal cause

  • The enrichment must be unjustified. Enrichment is unjustified when there is no sufficient legal ground for the transfer of value from one estate to the other or the retention of such benefit.

In conclusion, it can be said that when looking at Unjustified Enrichment, one should look at it through an objective lens and not a subjective one. It is a question of fact and does not depend on subjective factors like a mistake on the part of the parties. South African law determines that performance can be reclaimed under an excusable mistake, especially when the person deposited money under the mistake that the money was due to that bank account. Therefore, one can state that Unjustified Enrichment is a remedy that requires one to do self-correction, which in turn will promote fairness when the law does not provide any remedy and it aims to weigh the interests of individuals involved and provide restitution where necessary.

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