Discharge-for-value defense

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The discharge-for-value defense defeats a claim for unjustified enrichment under New York law where a recipient, without notice of mistake and not having induced the payment, receives funds that discharge a valid debt:

“When a beneficiary receives money to which it is entitled and has no knowledge that the money was erroneously wired, the beneficiary should not have to wonder whether it may retain the funds; rather, such a beneficiary should be able to consider the transfer of funds as a final and complete transaction, not subject to revocation.” Banque Worms v Bank America (1991) 570 N.E. 2d 189

There is no equivalent under the English law of restitution. In an equivalent case an enriched lender has to return the money: Barclays Bank Ltd v WJ Simms

See also

• Restitution
• Citigroup v Brigade Capital Management
• Barclays Bank Ltd v WJ Simms