Restitution Discussion Group Archives
| Sender: |
Richard Sutton |
| Date: |
Tue, 3 Sep 1996 17:31:08 NZST |
| Re: |
Comments on partial failure |
I am a law student at UWA doing an
honours thesis in restitution - in particular - I am examining a doctrine
of partial failure of consideration, and have encountered a few interesting
points on which I would appreciate anyone's opinion. 1. The nature of a quantum meruit as a remedy - particularly
for a total failure of consideration- appears anomalous within the law
of unjust enrichment. Surely the enrichment of a defendant would be
better measured by a measure such as the net realisable value of a benefit
received, than a quantum meruit which really is measuring the plaintiff's
reasonable costs rather than a defendant's gain. At best it is just
a rough cost-based approximation of a defendant's gain. 2. Although most commentators seem
set on a contractual ceiling in cases where a quantum meruit exceeds
the contract price isn't this allowing a subjective measure of the defendant's
gain? The principle of subjective devaluation in relation to the question
of enrichment is directed to protecting the principle of freedom of
choice. Once it is determined that the def has been enriched, it would
not appear that the defendants subjective opinion as to the value of
his gain (as evidenced by the contract price) is relevant to the determination
of the quantum of the restitutionary reward. Further, in the context
of unenforceable contracts, a plaintiff cannot rely on the contract
price when it is MORE than the quantum meruit (Deane J, Pavey)
so why should a defendant in breach be able to rely on the contract
price as a ceiling? Your question does indeed raise some very interesting
issues, as does Andrew Tettenborn's reply. Could I offer some, possibly
heretical, thoughts from the antipodes? Clearly the courts and writers are drawing on policies
that appear at first sight to have more to do with contract (recognising
expectations of price and profit) than they do with restitution (establishing
the current state of the plaintiff's enrichment).
These policies prevail over the methods the courts have
customarily used to deal with other cases of unjust enrichment, for example,
where there is a mistake, or a totally void contract. This suggests that
any policies which may be associated with the law of restitution are weak
here, whereas policies associated with honouring expectations are strong
- unless the Courts have good policy grounds for cancelling out those
expectations (evidenced by the fact that, under the law of contract, a
particular contract is mistaken or void).
I think the observation of this phenomenon calls into
question big assumptions that are sometimes made about the law of restitution
using an invariable register of definitions of key concepts such as "benefit"
and "mistake". This approach minimises the role of policy in shaping the
application of the principles of the law of restitution to deal with particular
classes of case.
There are consequent issues about the borderline between
those two theoretical constructs, the "law of contract" and the "law of
restitution". Could it be that some legal rules, such as those whose application
gives rise to a quantum meruit, owe allegiances in both camps? That, because
they enjoy some of the characteristics both of contract and of restitution,
they may be categorised as one or the other, depending upon the purpose
for which the court is doing the categorisation?
Taking this approach seriously, it follows that the HCA
in Pavey,
while properly recognising the restitutionary element in the case, might
still have classified the supposed "restitutionary" cause of action as
contractual for the purposes of statutory formal requirements. Whether
it should have done so would depend not purely on legal theorisation,
but also on its assessment of the policy of the particular statute.
Good luck in your efforts.
Richard Sutton
-------------------------- Ph: 04 4733 453 < Views expressed are not necessarily those of the Law
Commission >
Mr Richard Sutton
Law Commission
PO Box 2590, Wellington
NEW ZEALAND
Fax: 04 4710 959
DX 8434
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