Misappropriation

Primary tabs

In law, misappropriation may be defined as "[t]he unauthorized, improper, or unlawful use of funds or other property for purposes other than that for which intended."  Misappropriation commonly refers to situations in which the offending party has an added measure of responsibility, such as misconduct by a public official, a trustee of a trust, or an administrator of a deceased person's estate.  An individual who has committed misappropriation may be liable to criminal prosecution for a form of theft as well as disciplinary action, if the person is a civil servant.

Additional examples include the following:

  • Misappropriation may refer to a common law doctrine under the rubric of unfair competition. The misappropriation doctrine seeks to "protect something of value not otherwise covered by patent or copyright law, trade secret law, breach of confidential relationship, or some other form of unfair competition.”  In California, the elements of a misrepresentation claim are the following: 1) substantial investment of time, skill or money by the plaintiff in developing some property; 2) appropriation and use of that property at little or no cost by the defendant; 3) the appropriation and use done without authorization or consent from the plaintiff; and 4) proof of injury to the plaintiff due to the defendant’s action.
  • In the context of legal ethics, misappropriation may designate a level of culpability in a lawyer’s mishandling of client funds.  As noted by the Oklahoma Supreme Court in 2019, misappropriation in Oklahoma is the “most serious level of culpability,” preceded by commingling and simple conversion, and “occurs when a lawyer purposefully deprives a client of money through deceit and fraud.” Other courts may use misappropriation more broadly, as the Supreme Court of New Jersey did, defining it as “any unauthorized use by the lawyer of clients' funds entrusted to him, including not only stealing, but also unauthorized temporary use for the lawyer's own purpose, whether or not he derives any personal gain or benefit therefrom.”

[Last updated in July of 2020 by the Wex Definitions Team]