In cases where there is no contract,7 or where the contract is subsequently held to be illegal, a claim for unjust enrichment may be successful.8 However, while the construction industry is notorious for carrying out works where contracts have not been signed or where there is a letter of intent, it does not follow that there will be no contract. Recent case law has shown that the courts are ready to construe that a contract has come into existence by conduct, even where not all terms are agreed. In the recent case of Reveille Independent LLC v Anotech International9 the Court of Appeal held that there was a contract, despite the fact that a written document stated that a contract would not come into existence until the document was signed, which the parties never did. In this case the acceptance of the contract was evidenced by the clear performance of the obligations under the contract that showed that the parties intended to be bound by the contract. In the case of ISG Retail Ltd v Castletech Construction Ltd10 the court had to consider whether a claim for unjust enrichment could succeed where there had been a total failure of consideration by one party. In this case one party was claiming back by way of restitution a deposit paid where the other party had failed to provide any consideration under the contract. The court held that “restitution is based on unjust enrichment, and that that is a different cause of action from breach of contract... But… there is a type of breach of contract (total non-performance) that can give rise to an alternative remedy by way of restitution. There is nothing in the Scheme [for Construction Contracts] that deprives an adjudicator of the power to grant relief by way of restitution if that is an available remedy for the breach of contract in question.”
However, although claims for unjust enrichment rarely succeed where a contract is in place, the use of unjust enrichment is becoming more relevant to the construction industry. There are a number of situations that can arise where one party may be unjustly enriched. The first example relates to where an adjudicator or DAB awards a sum to one party which is greater than the actual loss incurred. The recovery of the money paid can be claimed by way of unjust enrichment. The second example is where a call is made on a bond and where the amount paid under the bond is more than the loss incurred. Unjust Enrichment and Adjudication Claims for unjust enrichment have been successfully made in cases relating to an overpayment made under an adjudicator’s decision. In the case of Aspect v Higgins11 the Supreme Court held that a claim for the recovery of monies paid under an adjudicator’s decision could be advanced by “contractual implication or, if not, then by virtue of an independent restitutionary obligation”. Here the claim is not being made under the construction contract but under the terms of the adjudication agreement which requires or infers that a party is entitled to re-payment if he proves that the adjudicator awarded more than was due. In Kitt & Anor v The Laundry Building Ltd & Anor12 the court considered what the cause of action was where one party paid an adjudicator for its decision and that party was subsequently awarded the costs of the adjudication. The court suggested that a claim could be made under the adjudication agreement but that if there was no contractual remedy a claim could be advanced for unjust enrichment. The court stated that an adjudication agreement creates a tripartite contract between the parties to the adjudication and the adjudicator in respect of the latter's fees. “The parties will therefore have agreed that, if the decision required one rather than the other party to pay the adjudicator’s fees, that party would pay those fees. Although both parties are jointly and severally liable to the adjudicator in respect of those fees, and, therefore, the adjudicator could sue either party