Business Law and the Regulation of Business 11th Edition by Richard Mann, Barry Roberts

Exercise 1

FACTS On May 5, 2006, Stewart Richardson (Seller) and JASDIP Properties SC, LLC (Buyer) entered into an agreement for the purchase of certain property in Georgetown, South Carolina. The purchase price for the property was to be $537,000. The buyer paid an initial earnest money deposit of $10,000. The balance was due at the closing on or before July 28, 2006. Thereafter the seller granted the buyer extensions to the closing date in return for additional payments of $175,000 and $25,000, each to be applied to the purchase price. The buyer was unable to close in a timely fashion, and the seller rescinded the contract.
Thereafter, the buyer brought suit against the seller (1) contending that the seller would be unjustly enriched if allowed to keep the money paid despite the rescission of the agreement and (2) requesting $210,000. The $210,000 consisted of the $10,000 earnest money deposit and $200,000 in subsequent payments. The buyer later filed an amended complaint requesting $205,000, stating that the agreement permitted the seller to retain half of the $10,000 earnest money deposit.
A jury determined that neither party had breached the contract and awarded no damages on that basis. The buyer then requested a ruling by the trial court on its action for unjust enrichment. The trial court denied the buyer's claim for unjust enrichment. The buyer appealed arguing that all the evidence presented at trial, as well as the jury's verdict, supports a finding that the agreement was rescinded or abandoned and that this requires restitution of $205,000 to the buyer.
DECISION Judgment of the trial court is reversed, and the case is remanded.
OPINION Konduros, J. ''Restitution is a remedy designed to prevent unjust enrichment.'' [Citation.]
(''Unjust enrichment is an equitable doctrine, akin to restitution, which permits the recovery of that amount the defendant has been unjustly enriched at the expense of the plaintiff.''). ''The terms 'restitution' and 'unjust enrichment' are modern designations for the older doctrine of quasi-contract.'' [Citation.] ''[Q]uantum meruit, quasi-contract, and implied by law contract are equivalent terms for an equitable remedy.'' [Citation.]
''Implied in law or quasi-contract are not considered contracts at all, but are akin to restitution which permits recovery of that amount the defendant has been benefitted at the expense of the plaintiff in order to preclude unjust enrichment.'' [Citation.] ***
''To recover on a theory of restitution, the plaintiff must show (1) that he conferred a non-gratuitous benefit on the defendant; (2) that the defendant realized some value from the benefit; and (3) that it would be inequitable for the defendant to retain the benefit without paying the plaintiff for its value.'' [Citation.] ''Unjust enrichment is usually a prerequisite for enforcement of the doctrine of restitution; if there is no basis for unjust enrichment, there is no basis for restitution.'' [Citation.]
Buyer seeks the $175,000 and $25,000 payments as well as the $10,000 in earnest money *** Additionally, in its amended complaint, Buyer states that under the Agreement, Seller can only keep half of the $10,000 in earnest money and only requests a total of $205,000. An issue conceded in the trial court cannot be argued on appeal. [Citation.] Therefore, Buyer is bound by that concession and entitled to $5,000 of the earnest money at most.
The $175,000 and $25,000 payments both explicitly stated that they were towards the purchase price. Additionally, Buyer paid $10,000 in an earnest money deposit. The unappealed finding of the jury was that neither party breached the Agreement. An unchallenged ruling, right or wrong, is the law of the case. [Citation.] Based on the jury's finding that Buyer did not breach, we find Buyer is entitled to the money paid towards the purchase price as well as half of the earnest money under the theory of restitution. Buyer met the requirements to recover under the theory of restitution: (1) Buyer paid Seller $205,000 towards the purchase price and the sale did not go through despite the fact that neither party breached; (2) Seller kept the $205,000 although he also retained the Property; and (3) Seller keeping the $205,000 is inequitable because the Seller still has the Property, the jury found neither party breached, and the evidence supports that Buyer intended to go forward with the purchase. Therefore, the trial court erred in failing to find for Buyer for its claim of unjust enrichment. Accordingly, we reverse the trial court's determination that Buyer was not entitled to restitution and award Buyer $205,000.
INTERPRETATION Implied in law or quasi contracts are not considered contracts at all, but are akin to restitution which permits recovery of that amount the defendant has been benefited at the expense of the plaintiff in order to prevent unjust enrichment.
CRITICAL THINKING QUESTION Why does the law allow a recovery in quasi contract?