Contract - Restitution and Unjust Enrichment (5) Flashcards
What is restitution and unjust enrichment?
Restitution and Unjust Enrichment: ‘Restitution’ is a remedy awarded to prevent the unjust enrichment of one party at the expense of another, and is awarded both in respect of breaches and in other circumstances.
What is the total failure of consideration?
Total Failure of Consideration: TFoC occurs where A has paid B under a contract, but B has failed to fulfil any of their contractual obligations.
(1) Restitution: A can bring a claim in restitution to recover the entire amount paid to B. If B had partially started the contract, then only damages are available.
(2) Damages: If A had to mitigate their loss by purchasing an alternative product for a higher cost, they can also bring a damages claim to recover their loss.
What is Compensation for Work Done/Goods Supplied?
Compensation for Work Done or Goods Supplied: A party may bring a claim in restitution in respect of work done or goods supplied in a contract broken or never formed.
(1) Broken Contract: A supplies goods or works for B, and then B improperly brings the contract to an end. A can either seek damages for loss of profit, or a reasonable sum (quantum meruit) in restitution for work done.
(2) Unformed Contract: A does some work for B in anticipation of a contract, but the contract never ultimately forms. A is entitled to a reasonable sum for work done, but not damages (as no contract had ever formed).
What are other restitutionary damages?
Other Restitutionary Damages: Very rarely, courts will award damages which do not necessarily reflect any loss to the claimant. It occurs where it would be unfair to allow a defendant to benefit from a breach of contract.
(1) Negotiating Damages: A promised to obtain B’s consent to sell a product, but did not. B suffered no loss, but lost out on an opportunity to benefit from A, such as a release fee. As such, B is awarded ‘negotiating damages’ (Wrotham Park v Parkside).
(2) Wrongdoers Damages: Very rarely, courts will order a defendant to pay damages in breach of contract which caused no loss, if it would otherwise be grossly unfair.
Example: British spy published and profited from a book in contravention of British Secrets Act; court ordered them to account for all gains, even though Crown suffered no loss (A-G v Blake).
