What is an example of Conversion Law?
In business disputes, conversion claims are frequently used, especially in deals involving personal property. A conversion claim may also be made in business transactions where money is exchanged. Although it is not a complicated concept, it is frequently misunderstood.
Conversion is defined as “any distinct act of dominion wrongfully exerted over another’s personal property in denial of or inconsistent with his rights therein.” Your property is converted if you give someone your personal property to keep and they don’t return it to you when you ask.
Due to the fact that money is fungible by nature, converting it is more complex. As a result, the law of conversion as it relates to money mandates a contractual duty to return specific funds given to another party.
For instance, if I ask you to keep $500 in cash with the understanding that I’ll get it back when I ask for it, and I don’t, then I have a claim for conversion of money. However, if I write you a check for $500 to cover the cost of the services you are to provide and any related expenses, and you fail to provide all of the promised services, you will most likely be held liable for damages in a breach of contract lawsuit, even though you haven’t broken any laws.
In fact, by your actions you have not converted my money because there is no way to trace specific funds that you would have a legal obligation to return to me, especially since you will claim that some of the money was actually earned. The funds were combined in a single check for more than one purpose (i.e. compensation and expense reimbursement).