Restitution Discussion Group Archives
| Sender: |
Mark Gergen |
| Date: |
Fri, 11 Apr 2003 08:57:19 -0500 |
| Re: |
Actionstrength Ltd |
I would appreciate advice from those knowledgeable in
Canadian law about how an UE claim would fare following Atlas
Cabinets & Furniture Ltd. v. National Trust Co.
The following proposed section in the Restatement
(Third) Restitution and Unjust Enrichment speaks to this sort of claim:
§27. Expectation of benefit from property.
A person who makes an expenditure to improve or maintain
property has a claim in restitution against another who ultimately benefits
from such expenditure, as necessary to prevent unjust enrichment, if
(a) the claimant acts on the basis of justifiable
assumptions about the claimant's own legal or beneficial interest,
existing or reasonably anticipated, in the property in question;
(b) the claimant's expectation of ownership is subsequently
frustrated, with the result that the defendant becomes an unintended
beneficiary of the claimant's expenditure;
(c) the claimant is not deemed to have assumed the
risk that the expenditure in question would ultimately benefit someone
else; and
(d) the circumstances of the transaction justify
the claimant's decision to act without prior agreement for payment
or reimbursement.
The sticking point is the requirement in (a) that the
claimant have an expectation of a proprietary interest in the product
of his work. The comments to R3RUE do not explain the reason or basis
for that requirement. I attribute it to the fact that most of the cases
that are authority for the rule come out of the law on constructive trusts
and equitable liens, which required that the claimant be able to point
to property in the defendant's hands (but not that the claimant establish
an expectation of a proprietary interest in that property). The requirement
does serve the useful purpose of cabining the rule so it doesn't reach
cases like Atlas Cabinets and Actionstrength.
My sense in reading the opinions in Actionstrength
is that the Lords did not believe the sub's allegations that it had a
guarantee from the owner. Or, to put it a bit differently, the Lords were
skeptical enough about those allegations that it seemed an appropriate
case to apply the statute of frauds. For obvious reasons, it is difficult
to justify denying an estoppel or UE claim on what are essentially factual
grounds. The 2nd Restatement of Contracts (§ 139) is fairly candid in
stating that the degree to which the reliance (or performance) is evidence
of the making of the alleged oral promise is a factor to be considered
in deciding whether an oral promise should be enforced notwithstanding
the bar of the statute of frauds. As a general matter, performance by
a sub of its contract with a general is not much evidence of a guarantee
of payment from the person who hired the general. I would prefer that
we talk about what makes a meritorious restitution claim in similarly
candid terms when a person who performs under an alleged contested informal
agreement seeks to recover the cost or value of their performance.
A final note, Doug Rendleman reports in at article at
79 Tex. L. Rev. 2055 that US courts generally allow the sub to collect
payment from the owner for work done when the general defaults, without
the trappings of an alleged oral guarantee, if not to do so would leave
the owner with the benefit of work for which he has not paid. For cases
see notes 81 (at 2073) and 83 (at 2074).
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