Commentary on Judgment No. 21138 of 2024: Compensation for Unjust Enrichment and Recovery Function

The recent order of the Court of Cassation No. 21138 of July 29, 2024 provides an important reflection on compensation for unjust enrichment, governed by Article 2041 of the Italian Civil Code. In this instance, the Court reiterated that compensation has a recovery function and not a compensatory one, thus clarifying the boundaries of property protection in cases of invalid relations.

The context of the ruling

The dispute in question saw C. and I. opposing each other, with the Court of Appeal of Cagliari initially recognizing compensation based on regional price lists, including business profit. However, the Court of Cassation, with this order, overturned that decision, highlighting that compensation cannot be used to offset an economic loss resulting from an invalid contract.

The recovery function of compensation

The compensation for unjust enrichment has a recovery function (aimed at compensating the inequity arising from the unjustified transfer of assets in the face of the law, establishing its return) and not a compensatory function (aimed at restoring the actual amount of the damage suffered); it follows that the performer of a service under an invalid contract cannot demand, to compensate for the patrimonial decrease suffered, to obtain what they would have received as profit if the contractual relationship had been valid and effective because the restitutive need that underpins the institution cannot neutralize the non-existence or the original or subsequent invalidity of that relationship.

This maxim highlights how compensation cannot aim to restore the potential profit that the performer would have earned if the contract had been valid. The Court emphasizes the importance of the recovery function, which aims to return the value of the unjustly suffered damage, without however granting an additional economic advantage to the creditor.

Practical consequences of the ruling

These considerations have important implications for legal practitioners and anyone involved in issues of unjust enrichment. It is essential to understand that:

  • Compensation should not reflect the market value of a good or service, but rather the value that must be returned to restore the previous patrimonial situation.
  • It is not possible to claim compensation that takes into account future or potential profits arising from invalid contractual relationships.
  • The distinction between recovery function and compensatory function is crucial to avoid excessive or unfounded compensation requests.

The Court of Cassation, therefore, has established an important milestone in the matter of compensation for unjust enrichment, clarifying the limits and conditions necessary for its application.

Conclusions

In conclusion, Judgment No. 21138 of 2024 represents a significant step in defining the boundaries of compensation for unjust enrichment. The decision of the Court of Cassation reaffirms the importance of the recovery function, excluding any form of compensation that may be interpreted as compensatory, and ensures greater legal certainty in an often controversial area. This ruling serves to protect property rights and promote greater fairness in contractual relations.

Bianucci Law Firm