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PVL3704 Undue Enrichment Liability And Estoppel

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PVL3704 Undue Enrichment Liability And Estoppel

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PVL3704 Undue Enrichment Liability And Estoppel

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Course Code: PVL3704
University: University Of South Africa is not sponsored or endorsed by this college or university

Country: South Africa


1. Analyse given real life situations and legal documents to demonstrate an understanding of the history and theoretical framework of, and the most pressing and prevalent issues regarding the law relating to unjustified enrichment liability and estoppel.2. Apply the principles of undue enrichment law and estoppel in practical situations and solve multi-dimensional legal problems associated with enrichment liability and estoppel.

The term enrichment is generally used to describe a situation when the estate of one person is increased in an unjustified manner at the cost of another person. 
Generally under the prevalent principle the plaintiff (one who files suit) has been given the liberty/ permission to claim the amount that has been impoverished, or the amount by which the defendant/ respondent ( one who is responding) has been advantage off or enriched, whichever is lower 

The time of calculation of quantum is the institution of claim by the plaintiff at an appropriate forum;
This implies that defendant shall not be liable for benefits that, due to his enrichment, could have gained, but didn’t. If the enrichment of the defendant has declined or extinguished before the institution of claim, the liability of defendant shall decrease proportionally or extinguish accordingly. Further, the onus to prove that there has been no enrichment lies with the defendant(What is wrong with modern unjustified enrichment law in South Africa?) 

There are four circumstances under which the quantum of enrichment shall be calculate before institution of date of action:

The moment when the defendant is aware of such enrichment;
Earlier moment when under normal circumstances the defendant should have been aware that the benefit accruing to him is unjustified;(
When defendant has fallen into moraand
There has been a mala fideaction by the defendant. 

The afore stated exceptions don’t apply to minors. 
While valuing or quantifying the amount of claim all impact whether positive or negative shall be taken into consideration.  Any Interest earned on justly earned money in the hands of the defendant before filing of suit or litis contestatio cannot be claimed by the plaintiff as an award for impoverishment However, after mora the plaintiff can claim interest of mora. (UNJUSTIFIED ENRICHMENT LIABILITY AND ESTOPPE) 
Further, if the defendant has expended the money on something that under general parlance he should not have done if that money was earned in a justified manner not at the expense of other, he can raise the defence of non-enrichment. 
However, if any goods on which money is expended is still at the disposition of the defendant and such good still holds market value, the plaintiff can claim the same from the defendant in term of the principle of unjustified enrichment. (Classical Enrichment Action) Further, if the goods are more valuable than the enrichment or loss, the excess shall be paid back to the defendant. 
Thus, the above states the manner of computation of unjustified enrichment in layman terms.  
A has demanded payment from B of an amount of R50,000 which he believes B is owing. B has checked his records and has paid the amount in the bona fide belief that the amount is owed in terms of their contract. Unbeknown to B, his bookkeeper, C had already paid the amount a week earlier by way of an electronic funds transfer into the account of A. At the time of the second payment A’s account was overdrawn in the amount of R30,000 and was therefore in credit of R20,000 after the payment. A has taken R15,000 out of his account to pay his employees their monthly wages. He has also paid R10,000 for a luxury weekend after realising that his account was in credit. Discuss whether B has a claim against A and, if so, how much he may claim.  
 The following steps shall be followed to answer the question. The steps have been detailed here-in-below: 
Step 1:  One must identify whether A has a claim and what type of claim shall be relevant for the case mentioned;
Step 2: One must discuss the relevant requirement for making a successful claim under the desired action and any defence to me maintained under such a claim
Step 3:  One must apply the requirement of the claim to the fact;
Step 4:. One shall make a definite conclusion about the question. 
Step 1: Identification of the relevant action or claim 
Under the abovementioned question, B can institute a claim of unjustified enrichment against A and the remedy lying at its disposition shall be condictio indebiti. The said action is available to plaintiff when a person pays an unowed debt on account of a justifiable mistake. Further, A has been enriched at the cost of B because B has made the payment to A in person on account of mistake even if C physically made the payment. (1) 
Step 2: Discuss the relevant requirements and possible defences

B has transferred R 50,000 to A;
The transfer to A had been on account of a justifiable mistake by B
The mistake by B has been reasonable under the circumstances as B was not aware of the payment made by C;
Further, considering the defences, the issue of enrichment shall be paid heed to. Paying-off an overdraft does not reduce enrichment as the same shall account to decline in debt. Further, the payment of wages shall also not cause enrichment to diminish.(PVL 3704) 

However, the expenditure incurred on account of a luxury holiday can constitute an extinction of enrichment if the receiver of the money did not know or could not have known that he or she had been enriched. An enrichment claim can only be successful if the enrichment still exists in the possession of the enriched party at the time the claim is lodged. 
Step 3: Applying the requirements to the facts 
B has mistakenly paid R50, 000 to A under the belief he owed an amount in terms of their contract however the same was not the case. The mistaken belief of B under the present circumstance is reasonable as B had a bona fide belief that the amount was owed as they had a contract.
Further, A has been initially enriched by an amount of R50, 000 on receipt of the money from B and C and the payment of the overdraft shall not diminish his advantage or enrichment. Further, the payment of wages also does not diminish the enrichment as both liabilities would have had to have been paid at any rate. However, the expenditure incurred on account of a luxury weekend shall be considered as diminishment of his enrichment, as the person probably would not have incurred the same if his account had not been credited.
Step 4 : Make a definite conclusion on the question asked
B has an enrichment claim against A amounting to R40, 000 only as the rest of the enrichment amount has been lost on the luxury holiday.
Classical Enrichment Action. (n.d.). Retrieved August 12, 2018, from (n.d.). Retrieved August 12, 2018, from Undue Enrichment and Estoppel:
PVL 3704. (n.d.). Retrieved August 12, 2018, from
UNJUSTIFIED ENRICHMENT LIABILITY AND ESTOPPE. (n.d.). Retrieved August 12, 2018, from /
What is wrong with modern unjustified enrichment law in South Africa? (n.d.). Retrieved August 12, 2018, from 

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