X-Sender: at10006@cus.cam.ac.uk To: restitution@majordomo.srv.ualberta.ca From: at10006@cus.cam.ac.uk (Andrew Tettenborn) Subject: Re: restitution Comments on partial failure Date: Mon, 2 Sep 1996 11:29:37 +0100 Sender: owner-restitution@majordomo.srv.ualberta.ca Reply-To: restitution@majordomo.srv.ualberta.ca > > > > >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? > >That's all for now, > >Any comments would be greatly appreciated! > >James Edelman > > > An interesting question. Isn't the answer as follows? 1. If I render you services and sue you on a quantum meruit, isn't the sensible prima facie measure of your enrichment the amount you'd have had to pay for the services if you'd got them elsewhere? The amount you can now get if you `realise' them seems to me to be a bit of a red herring, and furthermore might well have the effect of depriving you of a profit you quite legitimately expected to make from reselling them. Also, what about the case where services are rendered at your request? I simply can't see why you shouldn't - extraordinary circumstances aside - have to pay a straightforward reasonable price for them. True, if you have a situation where services are rendered under a contract void for mistake - the classic Vickery v Ritchie situation - there might be a case for limiting recovery to realised (or realisable) value. But isn't that better done by extending a flexible change of position defence? 2. The reason I incline to support a contract ceiling, at least in valid contract cases, is that to abandon it has the effect of subverting contractual expectations. If I agree to do something for $1000 you have a very legitimate expectation that you won't have to pay more than $1000 (or pro rata plus front-end loading). To let me get more than that defeats the object of the exercise. The only case where this reasoning doesn't apply is where there wasn't a valid contract in the first place, since there your expectation of a limited price is that less legitimate. Andrew Tettenborn. >Received: by lawcomm01.lawcom.govt.nz; Tue, 3 Sep 96 17:31:09 NZS From: Mr Richard Sutton (C-2) Subject: Re: restitution Comments on partial failure To: restitution@majordomo.srv.ualberta.ca Date: Tue, 3 Sep 96 17:31:08 NZST Sender: owner-restitution@majordomo.srv.ualberta.ca Reply-To: restitution@majordomo.srv.ualberta.ca > > > > > >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? > >That's all for now, > >Any comments would be greatly appreciated! > >James Edelman > Your question does indeed raise some very interesting issues, as does Andrew Tettenbourn'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 -- Mr Richard Sutton ------------------------ suttonr@lawcom.govt.nz | Law Commission Ph: 04 4733 453 | | PO Box 2590, Wellington Fax: 04 4710 959 | | NEW ZEALAND DX 8434 | | < Views expressed are not necessarily those of the Law Commission > | ------------------------------------------------------------------------- Date: Thu, 5 Sep 1996 10:42:20 -0600 (EDT) From: Andrew Kull To: John Murphy Cc: Restitution Discussion Group Subject: Re: restitution Restitution of prepayments under illegal contract X-Sender: akull@law.emory.edu Sender: owner-restitution@majordomo.srv.ualberta.ca Reply-To: restitution@majordomo.srv.ualberta.ca I don't know whether US authority in restitution cases carries any weight in Australia. But if it does, see chapter 8 of Palmer, Law of Restitution, "Restitution Under Illegal Contracts," for a useful treatment of the standard analysis in this country--in essence, an inquiry whether restitution would be "in conflict with overriding policies pursuant to which the transaction is made illegal." Palmer and the US cases generally would be authority against quantum meruit in the case you pose. Andrew Kull akull@law.emory.edu Date: Thu, 5 Sep 1996 09:20:11 +0800 (WST) From: james edelman - student To: restitution@majordomo.srv.ualberta.ca Subject: restitution Some further thoughts on partial failure Sender: owner-restitution@majordomo.srv.ualberta.ca Reply-To: restitution@majordomo.srv.ualberta.ca Previously, I wrote asking for ideas relating to 2 areas: 1. The nature of a quantum meruit as a remedy - particularly for a total failure of consideration. 2. Whether a contractual ceiling should be seen as appropriate within the enrichment context of restitution. In a forthcoming issue of the Newcastle Law Review, I suggest an example where these issues may become important : You have a valid contract to build a house with me for say $100,000. I make full payment up front. Halfway through construction, I breach the contract and you terminate. CAn you recover in restitution and if so what is the quantum of the remedy? If the reverse situation had occurred (full house built , half payment), it would seem that as counter-restitution is easy , the money would be returned and a quantum meruit awarded for the value of the building. It seems in this case of a non-monetary benefit that determining the quantum of counter-restitution (to make counter-restitution) should not be that difficult. That is, why should it be any more difficult to value half a house than a whole house. If the valuation of the whole house is made on the basis of a quantum meruit (in making restitution in the case of a complete house) why should it be difficult to make counter-restitution for the quantum meruit of half a house? Thus, if the quantum meruit is an acceptable remedy suely it makes counter-restitution easy in these cases? Indeed, acceptance of such a doctrine would begin to unify this area of restitution by drawing free acceptance in with a doctrine of partial failure of consideration. The second issue then becomes of much importance - as if a contractual ceiling is to be employed then (as long as the remedy is breach-sensitive) this remedy will not really lead to any radically different results. Andrew Tettenborn commented in reply that there is a need for a contractual ceiling in cases (such as above) of a valid contract to avoid subverting contractual expectations. Indeed without a contractual ceiling, these expectation would be subverted. But shouldn't the central question be restoring an unjust enrichment rather than protecting expectations? Richard Sutton , in a reply, suggested that an issue which may arise in cases like this is whether the cause of action should be characterised as restitutionary or as one in contract. Once restitution is accepted why should contractual notions limit the claim. I suggested that the enrichment question should be considered in a qualitative sense (this goes to protect the principle of free choice) and only then the extent of the remedy should be considered. I suggested that if qualitative enrichment has been established, the court should look at the objective value of the benefit. Indeed, as was pointed out to me, the contract price may not even represent the Defendant's subjective opinion of value, as the may be a substantial consumer surplus. The contract price should be a relevant circumstance in determining the quantum meruit but once enrichment is established it seems that there is no reason to limit recovery to the contract price. Thanks to all for their comments, any replies appreciated. James Edelman Student University of Western Australia Date: Thu, 05 Sep 1996 23:12:05 -0700 From: John Murphy To: Restitution Discussion Group Subject: restitution Restitution of prepayments under illegal contract Sender: owner-restitution@majordomo.srv.ualberta.ca Reply-To: restitution@majordomo.srv.ualberta.ca The Queensland Surrogate Parenthood Act 1988 provides that any surrogacy contract is illegal and void. That's clear. The Act then goes on in s.4(2) to provide:- (2) No action shall be maintained in a court of Queensland - (a) for the enforcement of a [surrogacy contract]...; or (b) for the recovery of any money or other thing paid or given in connection with a [surrogacy contract]... I take it that s.4(2)(b)precludes any contractual or restitutionary action to recover a payment made to the surrogate mother. However, I am not sure that s.4(2)(a)prevents an extra-contractual action by the mother for, say, a quantum meruit. I say that because, in terms, it only forbids enforcement of the contract. Can anyone advise or point me at an authority? I would much appreciate any help. Regards to all, John Murphy johnm@ecn.net.au 160 Hellawell Road Sunnybank Hills Qld 4109 Australia X-Sender: lawf0014@sable.ox.ac.uk Date: Tue, 24 Sep 1996 21:49:41 +0000 To: restitution@majordomo.srv.ualberta.ca From: lionel.smith@Law.oxford.ac.uk (Lionel Smith) Subject: restitution Possible problems with the list Sender: owner-restitution@majordomo.srv.ualberta.ca Reply-To: restitution@majordomo.srv.ualberta.ca Greetings to all, and welcome to new subscribers. There has not been much traffic on the list lately, so what follows may not be too much of an inconvenience. However I want to warn everyone that the list may go down for some time. It is currently still running on a machine at the University of Alberta, even though my employment there ceased some months ago. I wanted to get a new list set up in Oxford before I ever moved, to ease the transition, and I was told this could be done back in June. However, I am still waiting, partly due to unavoidable stresses at Computing Services here in Oxford. I have just had a warning that my email address at the University of Alberta is likely to be terminated in two weeks. It may be that the list can continue to run without my email account, but it may not. So be forewarned that there may be difficulties, but I hope there will not. If you have a question or a problem, please email me at . Thanks, Lionel