I have often thought, and have even occasionally said, that much of the impetus for a 'law of unjust enrichment' comes from an unrealistically narrow view of contract, which is turn comes from studying too much general contract law and not enough of the actual contracts that come before the courts. This seems like a very good example.

It is probably pushing things too far to say that there is implied into every contract between a customer and a bank that the bank will not steal from the customer, because, though it almost certainly fulfils the terms of the officious bystander test, it is still an unreal proposition.

Do you imagine, then, that by the law of contract considered on its own, banks would be free to charge what they like for services, or take as much money from customer accounts for their own purposes, as they see fit ? What is "unreal" about the idea that they must hold themselves ready to pay the customer's money on demand and as directed, without diverting it elsewhere, and subject only to clear, agreed exceptions such as lawful charges ? Surely that is exactly what the customer expects. You have simply misled yourself by focusing on a case where a bank's misbehaviour happened to enrich it. The case would not be substantially different if the bank diverted the money elsewhere, and whether the bank lost or gained as a result would be irrelevant. Either way, they still owe the customer the money.

It is better to say that the contract simply does not cover the situation which has occurred. Thus, even if the existence of a valid contract between the parties can be said to bar an action for restitution of an unjust enrichment, the contract only does so if it governs the situation of the unjust enrichment. In Lord Hope's dictum from Dollar Land, the payment was made pursuant to contract, so that ex hypothesi, the contract governs and thus bars an action for restitution of an unjust enrichment relating to that payment; on the other hand in Miles v Wakefield, the contract did not in fact govern the 37/40ths of performance, so that it did not bar an action for a quantum meruit for the work actually done.

Which contract ? The original contract did not cover the situation. In the new situation which emerged, the parties agreed to act differently. The amount that must be paid for the performance is set in accordance with the expectations of the parties, of which there will be ample evidence from the earlier, inapplicable, contract

Steve Hedley

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FACULTY OF LAW, UNIVERSITY OF CAMBRIDGE

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