SW Legal studies in Business

Unjust Enrichment Suit May Proceed Even If Contract Is Illegal
Description Appeals court held that even if a contract is illegal and unenforceable, a suit for unjust enrichment related to the business dealings that occurred may proceed. It would be inequitable for one party to be enriched by the property of another party, even though there may be no breach of contract action.
Topic Contracts
Key Words Unjust Enrichment; Illegal Contract
C A S E   S U M M A R Y
Facts Duncan contracted to run a bar in a motel owned by Kasim. Duncan was to pay monthly rent, but was responsible for all expenses and would keep all profits. She made substantial improvements to the property and ran the bar until a dispute arose more than a year later over the fact that she failed to reveal to Kasim that she was a convicted felon. Because of her conviction, Duncan could not legally have an interest in a liquor license. Kasim locked Duncan out of the bar. Duncan sued Kasim for unjust enrichment and conversion, due to the value of the improvements she made to the bar. The district court dismissed the suit. Duncan appealed.
Decision

Reversed. The contract for Duncan to manage the bar is illegal because she is a convicted felon and may not have an interest in the liquor license needed to run a bar. However, this does not preclude an action for unjust enrichment. The elements are: 1) the plaintiff conferred a benefit on the defendant, who knows of the benefit; 2) the defendant accepts and retains the conferred benefit, and 3) under the circumstances it would be inequitable for the defendant to retain the benefit without paying for it. The fact that the contract is illegal does not mean that Kasim has the right to keep the property Duncan placed in the bar when she was in possession of it. Anything she brought to the premises she may remove. She also has the right to receive the value of fixtures not removable from the premises that enhance its value.

Citation Duncan v. Kasim, 2002 WL 125686 (Ct. App., Fla., 2002)

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