You should give the ring back, especially if the marriage never took place. There is lots of case law on this subject and states vary. An engagement ring is a conditional gift in anticipation of marriage. This is caused a condition precedent in contract language. Since the marriage never took place, the contact was never completed. Even though this is not your fault, you may not be entitled to keep the ring. There is also case law to the contrary, indicating that if the engagement was broken through no fault of your own, then you can keep the ring. However, Illinois courts have tended rule rule contrary to the fault theory when the marriage never rook place.
You know better than anyone whether your former fiance will actually attempt to take you to court. Even if he does, he could lose. The attempted infidelity does not have any bearing on the issue of return of the ring but the theories of condition precedent and and fault may come into play. You should discuss your situation in detail with a local attorney who will know best which way a court in your area is most likely to rule.
He CAN sue -- and if he does he'll win, hands down. Just give the ring back.
Some states say that when an engagement is broken, the court should look to see who was at fault for the break-up to determine whether the engagement ring should be returned. Illinois doesn't do that because it just tends to get way too messy trying to figure out whose fault it was.
For example, in your case, you might say he broke off the engagement by trying to have an extra (pre-)marital affair. He, on the other hand, might place fault on you by claiming you began to put on weight, or had bad taste in music, or tended to wear too much, or too little make-up. I'm exaggerating here, of course, but you can see the point that for the court (and the lawyers) it can quickly become problematic to determine whose fault brought down the marriage.
It is for that reason that Illinois has adopted the rule to view an engagement ring as a "conditional gift." When the marriage is called off, lawyers and judges say "the condition failed." When that happens, the conditional gift must be returned.
Yes he can sue you. Willl he win? These cases always turn on the facts. Here the facts you present are irrelevant. You will have to hire and pay a lawyer to represent you. You are not getting married so why in the world do you want the ring that represents what no longer exists? If it is worth a lot then you better believe he will most likely go after it.
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The second district recently held that the ring is his and you must return it (replevin). However, he has to file suit and have the court order you to return it if you do not want to. So, there is some strategy to how this is handled. If you don't think he will sue you for it, then you can keep it. I am not making any ethical judgment calls, just explaining how the law will work. If he sues you for you to return/give the ring back you can defend it ans see how the court rules. Until the Illinois Supreme court holds that it absolutely must be returned, you have options.