Unjust Enrichment

Question 1

What is the aim of restitutionary damages

Answer 1

Prevent one party being unjustly enriched at the expense of another

Question 2

When may a claim in restitution arise?

Answer 2

1. Breach of contract
2. No contract has come into existence
3. Complete failure of consideration after money has been paid under a contract
4. Party has done work / supplied goods and wants to be compensated for work done / goods provided

Question 3

When can an action be brought in restitution to recover money already paid?

Can also claim damages for additional costs for replacement or work

Answer 3

1. Payee is in breach
2. Total failure of consideration (no work whatsoever)

If started work then damages for cost of cure only

Question 4

When can a party bring a claim in restitution for a reasonable sum (compensation / quantum meruit) for work done / goods supplied?

As an alternative for damages

Answer 4

• Contract has been broken
  1. Contractor started work / supplied goods
  2. Other party is in breach (e.g. changed mind)
• Contract was never formed
  1. Both parties expected contract
  2. no contract formed
  3. D asks C to begin work
  4. C begins work
  5. D refuses to pay

Preferable to damages

Quantum Meruit (reasonable sum)

Question 5

What is quantum meruit?

Answer 5

Reasonable sum for work done

Question 6

What are Resitutionary Damages?

Answer 6

Remedies based on gains by D (not loss to C)

e.g. account of profits / Negotiating Damages

Question 7

When will account of profits be ordered?

Answer 7

1. Breach of contract
2. C suffers no financial loss
3. D makes profit at expense of C
4. Exceptional circumstances (e.g. traitor)

very rare

Question 8

What are negotiating damages?

Answer 8

Loss of opportunity to negotiate a fee for releasing a contractual restriction

e.g. breach of restrictive covenant

Question 9

When are negotiating damages available?

Answer 9

1. Breach of restrictive covenant
2. Loss of opportunity to negotiate a release fee
3. C suffers no clear financial loss

Remedy:
Sum C would have demanded to release D from covenant

Question 10

What is the doctrine of complete performance?

Answer 10

Performance must be precise and exact.

Payer does not have to pay any part of price (i.e. supplier entitled to nothing) unless exception applies.

Supplier does not have to return any money already paid (e.g. deposit) unless complete failure of consideration.

Past payments only recoverable if complete failure of consideration

Question 11

When can money be recovered under the doctrine of complete performance?

Answer 11

Requirements
1. Payer paid money to payee (e.g. contractor)
2. Payee is in breach of term
3. total failure of consideration (done nothing or work is useless)

Remedy
* Recovery of money paid
* damages if recovery of money doesn’t cover cost of replacement / cost of cure

Cannot reclaim past payment

Question 12

Exceptions to the general rule that if performance is not precise and exact (doctrine of complete performance) the payer does not have to pay any part of the price

i.e. some payment can be recovered even if obligations not fulfilled

Answer 12

1. Divisible Obligations
2. Substantial Performance
3. Wrongful Prevention of Performance
4. Voluntary Acceptance of Part Performance

Question 13

When can payment be recovered for past completed work under divisible obligations?

Answer 13

Requirements:
Agreed stage payments (payment agreed to distinct parts / stages of work)

Remedy:
* recover payment for completed stages (nothing for outstanding stages)
* customer can counter-claim and sue for damages if cost of cure + work paid for completed stages > original contract price

separate contracts: entitled to payment on completion of each stage

Question 14

When can payment be recovered for past work under substantial performance?

i.e. contractor wants paying as finished work but minor snags

Answer 14

Requirements:
1. Work is finished
2. Only slightly defective (taking into account nature of defect (fufil primary purpose) + cost of cure)
3. Cost of cure is not more than 1/14 (0.07) contract price

Remedy:
Balance of contract price - cost of cure

Contractor entitled to be paid balance - cost of cure

Question 15

When can payment be recovered for past work under wrongful prevention?

e.g. customer tells builder to leave as changed mind

Answer 15

Requirements:
1. Customer stops contractor completing obligations (not contractor’s fault incomplete)
2. Contractor has not committed a repudiatory breach (breached a condition or serious breach of innominate term)

*NOTE: if customer claims terminated because work is defective can claim breach of s13 (reaosonable skill). But can only terminate if deprived them of whole benefit. *

Remedy:
* Damages (contract price - expenses saved); or
* Quantum meruit (reasonable amount)

Damages preferable as all losses subject to mitigation

Question 16

When can payment be recovered for work done under voluntary acceptance of part performance?

e.g. customer chooses to accept part completion of work

Answer 16

Requirement:
1. Customer voluntarily (has a genuine choice (i.e. not abandonment)) agrees to accept part performance; or
2. Customer has no choice but to accept part performance but uses leftover materials

Remedy:
Quantum Meruit (reasonable sum) for either goods and services OR just goods

NOTE:
* If customer has no choice, does not have to pay for work; BUT
* if customer uses materials (as choice to use) will have to pay a reasonable sum (quantum meruit) for materials to supplier. But customer can sue builder for breach if loss (cost of cure)

Question 17

If a seller delivers a quantity of goods less than they contracted to supply but the other party accepts them, what rights does the seller have under CRA?

s25(1) CRA

Answer 17

Consumer must pay for the goods at the contract rate