Essay On Unjust Enrichment

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The change of position defence was not specifically recognised as a defence to claims in unjust enrichment in English Law. It has been formally recognised as a defence since the significant decision of the House of Lords in Lipkin Gorman v Karpnale LTD . In this case, the plaintiff, Lipkin Gorman (a firm of solicitors) sought to recover money which had been stolen from them by a partner, and then gambled away with the defendant. The defendant, having already purchased their gambling chips, argued that these being gambling debts were worthless and that no consideration had been given. In his leading speech, Lord Goff of Chieveley, stated unjust enrichment in the following terms:
“The recovery of money in restitution is not, as a general rule, a matter of discretion for the court. A claim to recover money at common law is made as a matter of right; and even though the underlying principle of recovery is the principle of unjust enrichment, nevertheless, where recovery is denied, it is denied on the basis of legal principle.”
In the case of Scottish Equitable plc v Derby , Mr Derby received an overpayment through the carelessness of his life assurance company and spent some of it on small improvements to his daily lifestyle. Despite the fact that Mr Derby had acted honestly and that Scottish Equitable was at fault, the defence was denied.
Both cases developed principles on the change of position defence that were used to obtain a conclusion to the case. Although principles were introduced, uncertainty remains in defining the figure of each of them.
Firstly, the burden of proof for each element of the defence is on the defendant. The defence will therefore fail in a situation where the defendant does not give a full accou...

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...s made for commercial reasons.
In addition, spending a payment that has been made in advance in relation to a contract that is later frustrated will enliven the defence. However, if the defendant spends the amount of money mistakenly received to him or her by the claimant for some other purpose such as holiday will not enliven the defence.
The effectiveness of the change of position defence in protecting a defendant from hardship can be observed through the modern case law and through the principles derived from the various cases. Both precedent and principles suggest that a defendant who knows that he or she is not entitled to his or her receipt should be precluded from relying on the change of position defence if he or she fails to take the care a reasonable man would in the circumstances, in particular, knowing that the benefit must be accounted for another.

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