Restitutionary Remedies in the Contractual Context

Published date01 May 2013
Date01 May 2013
Volume 76 May 2013 No 3
Restitutionary Remedies in the Contractual Context
Peter Jaffey*
Contracting parties sometimes have a claim to recover money paid in advance, or for reasonable
payment for work done under the contract, commonly described as restitutionary remedies.
This claim arising out of a contract is nowadays generally regarded as a non-contractual, unjust
enrichment claim governed by the modern law of unjust enrichment, by contrast with a
contractual claim for damages or specific performance. The article argues that the claim is
contractual, and that this is relevant to determining when it should be available and what the
measure of recovery should be. In particular, it is argued that this follows from the proper
understanding of the form of agreement made by contracting parties. The argument involves
discussion of doctrinal categories such as contract and unjust enrichment, the relationship between
primary and remedial rights in contract, the nature of contractual agreement, and the protection
of reliance in contract.
The standard remedies in contract, expectation damages and specific perform-
ance, give the claimant the benefit of the performance of the contract by putting
him in the position he would have been in if the contract had been performed.1
There are other remedies that sometimes arise out of a contract, or ‘in a
contractual context’,2that do not have this effect. Where the claimant has made
a payment to the defendant under the contract, and has not received the
performance due to him in return, he may be able to recover the payment.3
Similarly, where the claimant has supplied goods or services under the contract
and the defendant has not paid or become liable to pay under a payment clause,
the claimant may be entitled to reasonable payment for what he has done in
the form of a quantum meruit.4These remedies are commonly described as
restitutionary remedies, and I will use this expression, though, as I will suggest
below, it is not always apt.
*School of Law, Brunel University.
1 It is not necessary for present purposes to deal with the payment of an accrued debt separately.
2 This neutral expression is used in T. A. Baloch, Unjust Enrichment and Contract (Oxford: Hart,
2009) 1. In my usage it includes claims arising on frustration.
3egRowland vDivall [1923] 2 KB 500.
4egDe Bernady vHarding (1853) 8 Exch 822. For convenience, I use ‘quantum meruit’ to include
payment for goods or goods and services under the contract. The article is not concerned with an
implied term for reasonable payment where the contract does not specify a price.
© 2013 The Author. The Modern Law Review © 2013 The Modern Law Review Limited. (2013) 76(3) MLR 429–463
Published by Blackwell Publishing, 9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA
It has been controversial whether a claim for a restitutionary remedy in the
contractual context should be understood as a contractual claim or an unjust
enrichment claim, and it is also controversial whether and why this issue is of any
significance. As a matter of first impression, one might say that a claim for a
restitutionary remedy arising in these circumstances is a contractual claim, simply
because it arises out of a contract, as a result of the fact that the contract has not
been performed as the parties envisaged. But it is widely thought that the claim
cannot be contractual. First, the restitutionary remedy does not appear to be a
remedy for a breach of contract, because it does not serve to undo or correct the
breach of duty or its consequences, by putting the claimant in the position he
would have been in if the contractual duty had been performed. Secondly, it
does not necessarily arise from a breach by the defendant of his contractual duty
of performance.5It can arise on the frustration of the contract,6where the
defendant has not committed a breach, and even where it is the claimant
rather than the defendant who has breached the contract.7Furthermore, the
restitutionary remedies that arise when a valid contract terminates seem to be the
same as or very similar to the remedies that arise in respect of part performance
when a contract is void or is voidable and has been rescinded, and here the claim
is clearly non-contractual. Indeed, they seem to be the same or very similar to the
remedy that arises to undo a mistaken payment, which has no connection with
contract at all. A claim for a restitutionary remedy is nowadays generally taken to
be based, instead, on the principle of unjust enrichment, on the fact that the
defendant has received a benefit that in justice he ought to surrender or pay for.8
This approach is, of course, an aspect of the modern recognition of a general
category of unjust enrichment in the common law.
If the claim for a restitutionary remedy is based on a principle of unjust
enrichment, the restitutionary remedies have to be understood as requiring the
defendant to give up or pay for the benefit he has received,9but it is not at all
clear that this is how they should be understood. On the face of it, the recovery
of a payment is open to interpretation either as removing a benefit or restoring
a loss, and similarly the quantum meruit seems open to interpretation either as
the removal of, or payment for, a benefit, or as payment for what the claimant
has done, including compensation for his expenses. Furthermore, it seems
5 See eg P. Birks, ‘Restitution and the Freedom of Contract’ [1983] CLP 141.
6Fibrosa Spolka Akcjna vFairburn Lawson Combe Barbour Ltd [1943] AC 32, and the Law Reform
(Frustrated Contracts) Act 1943.
7Dies vBritish and International Mining and Finance Co [1939] 1 KB 724.
8 See, for example, A. Burrows, The Law of Restitution (Oxford: OUP, 3rd ed, 2011) 319; G. Virgo,
The Principles of the Law of Restitution (Oxford: OUP, 2nd ed, 2006) 304–305; J. Beatson et al,
Anson’s Law of Contract (Oxford: OUP, 29th ed, 2010) 587; Baloch, n 2 above, 67, 178–180; A.
Skelton, Restitution and Contract (Oxford: Mansfield Press, 1998); E. Peel, Treitel on The Law of
Contract (London: Sweet & Maxwell, 13th ed, 2011) 22-001.
9 The restitutionary remedy is often said to reverse a transfer or return a benefit, and this makes sense
when the claimant has made a transfer of money or goods to the defendant, but in the case of
providing services it is misleading to speak of reversing a transfer or returning the services as
opposed to paying for them: see, for example, S. Stoljar, The Law of Quasi-Contract (North Ryde,
NSW: The Law Book Co, 2nd ed, 1989) 197–199.
Restitutionary Remedies
© 2013 The Author. The Modern Law Review © 2013 The Modern Law Review Limited.
430 (2013) 76(3) MLR 429–463
possible that there should be a claim where no benefit has yet been conferred on
the defendant.10
Sometimes a contracting party has a claim for disgorgement. By this expres-
sion, I mean the removal of the profit made by the defendant through a wrong.
It is not the same thing as a restitutionary remedy, though it is also sometimes
said to be a response to unjust enrichment, and it may be equivalent to a
restitutionary remedy in some circumstances. A restitutionary remedy serves to
satisfy an interest of the claimant, by returning the claimant’s payment to him, or
providing him with payment for work done or a benefit conferred, and it need
not arise from a wrong. Disgorgement is necessarily a response to a wrong by the
defendant and it focuses on preventing the defendant from profiting through the
wrong, from which the claimant is in effect an accidental beneficiary.11 I shall not
consider disgorgement save where it is relevant to the discussion of restitutionary
In this article, I will explain why a claim for a restitutionary remedy in the
contractual context should be understood as a contractual claim and not as an
unjust enrichment claim, and why it is important which analysis is adopted. Two
underlying issues are considered in the next two sections of the article. The first
is the nature and significance of ‘doctrinal categories’ such as contract and unjust
enrichment – what it means to say that a claim arises in a certain doctrinal
category such as contract or unjust enrichment. The second is the relationship
between ‘rights and remedies’, or more accurately, primary and remedial rights,
which in contract would ordinarily be understood to mean the relationship
between the primary right to performance and the right to a remedy such as
compensation or specific performance that arises when the contract is breached.
In the subsequent sections, I will deal with the unjust enrichment account of the
claim for a restitutionary remedy in the contractual context, and then a suggested
contractual account.12
The nature of doctrinal categories is not often explicitly considered, but it is
clearly in issue in disputes about the classification of a claim in contract or unjust
enrichment. The approach I suggest below to doctrinal categories, although it is
not consistent with all writing on this question, seems to me to be the only way
10 PlanchévColburn (1831) 8 Bing 14 is usually understood in this way.
11 The restitutionary remedies have traditionally taken the form of a quantum meruit or money had
and received, but where disgorgement has been allowed it has taken the form of an account of
profits or constructive trust. Until recently, the position was that disgorgement was not available
at all for breach of contract; now there is limited availability under Attorney General vBlake [2000]
3 WLR 625. A similar usage is adopted in L. D. Smith, ‘The Province of the Law of Restitution’
(1992) 71 Can Bar Rev 672; P. Jaffey, ‘Restitutionary Damages and Disgorgement’ [1995] RLR
30; S. Worthington, ‘Reconsidering Disgorgement for Wrongs’ (1999) 62 MLR 218; J. Edelman,
Gain-Based Damages (Oxford: Hart, 2002). Disgorgement in this sense is not best described as a
remedy at all, because it does not serve to satisfy or fulfil C’s primary right in the particular sense
of securing to C the benefit of the right.
12 The suggested account is a version of an approach previously proposed: see P. Jaffey, The Nature
and Scope of Restitution (Oxford: Hart, 2000) ch 2.
Peter Jaffey
© 2013 The Author. The Modern Law Review © 2013 The Modern Law Review Limited. 431
(2013) 76(3) MLR 429–463

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