News & Insights

Contracts And Unjust Enrichment – Business Formations

By Paul Evelius

In Dolan v. McQuaide, the Court of Special Appeals has underscored the need for parties embarking on business start-ups to set forth their rights and obligations in clear, definitive language and at the same time demonstrated the valuable role that an “unjust enrichment” claim can play in the context of vague promises.

In 2002, Dolan promised to provide financial and other planning, as well as “subject matter expertise, intellectual capital, and business know-how,” for a car wash business which McQuaide wished to start. In exchange, McQuaide promised Dolan a 50% ownership interest in the venture and its profits.

Over the next several years, Dolan prepared a business plan, wrote contracts, and created a website and logo for the business. When McQuaide refused to give Dolan the 50% ownership interest, she sued him for breach of contract and unjust enrichment. The Court held that Dolan’s promises were so vague that no determination could be made as to whether she had fulfilled them and that therefore they could not be considered contractual.

However, while it rejected Dolan’s breach of contract claim on that basis, the Court also held that the car wash business could be required under an unjust enrichment theory to pay Dolan the value which it had realized from the various services which she had provided to it.