Study On The English Law Of Unjust Enrichment

Unjust Enrichment, which serves the purpose of reversing unjust enrichment, is one of the most important principles in civil law. In civil law system, the principle of Unjust Enrichment has a history of more than 2,000 years already. In common law system, on the contrary, the first effort made on codification of Unjust Enrichment was only dated 77 years ago. Take U.K as an example, the principle of Unjust Enrichment was first recognized by the House of Lords in Lipkin Gorman’s Case(1991). In reference to rational form, it was only been 10 years since the principle of Unjust Enrichment was incorporated in U.K.It suggests that, the principle of Unjust Enrichment is still a frontier subject in UK. By selecting the principle of Unjust Enrichment in U.K as the research subject, this paper has two goals to achieve: one is to introduce the evolving path of the principle of Unjust Enrichment in U.K thoroughly; the other one is to explore the current structure and system of the principle of Unjust Enrichment systematically. Let alone the introduction and conclusion, this paper is composed by 270,000 words and three general parts, among which six chapters will be found:Part 1(Chapter 1) is to introduce the history of unjust enrichment. As this paper mentioned, whether the quasi-contract is the oldest origin of the law of restitution has been disputed by two academic authorities, so this paper try to find the historical origin of the concept of quasi-contract. In the Roman law, coming in his Institutes to obligations, Gaius began with a proposition to the effect that every obligation arose either from a contract or from a wrong. However, he almost immediately encountered the obligation arising from a mistaken payment. This forced him to admit that the classification in terms of two causative events was not exhaustive. So he coined the word of ‘quasi’. Nearly four centuries after Gaius, Justinian’s Institutes adopted this quasi-resolution of the residual miscellany: ‘every obligation arises from a contract or as though from a contract or from a wrong or as thought from a wrong.’ However quasi-contract has a very shallow root in the common law. There are two reasons to explain it: first, it lacks of accurate definition and scholars almost use it in any non-contract obligation; secondly quasi-contract can be not compatible with the writ systems. This paper, therefore, argues that the concept and function of unjust enrichment is reflected by the various restitutionary writs in early English law.The function of unjust enrichment is realized by Account and Debt from 12 th century to the mid-18 th century. Originally Account was used to deal with the dispute between those who have trust relationship. After that, Account was used to deal with the restitution of mistaken payment, failure of consideration and for breach of fiduciary duty. In this sense, Account is identical to the modern law of restitution in application. Also, Debt was used to realize the function of unjust enrichment. Originally, Debt was used to deal with the restitution of three monetary obligations: rent, the price of goods sold or a loan of money. But Debt almost has the following defects: it could only be applied to liquidated sums of monetary obligations, also it was subject to Wager of Law, and claimant’s performance must to be provided firstly. For these reasons, UK’s court began to resort to Assumpsit, which is more flexible. After Slade’s Case(1602), Assumpsit became a general contractual remedy, and the doctrine of Implied-in-fact contract has been developed as well, by which the court can recognized the debts based on facts. After Bonne’s Case(1657), courts recognized contracts implied by law as well, but the contract implied in law is not a genuine agreement. This paper concluded that there are three contributions made by Assumpsit: first of all, it unified form of action for debt; secondly, it produced two forms of implied contract; thirdly, it created four remedies which are still currently enforceable, namely money had and received, money paid to, Quantum meruit and Quantum valebat.UK’s courts began to find the theoretical basis for unjust enrichment from the mid-18 th century to 20 th century. Lord Mansfield introduced the concept of quasi-contract from Roman law in Moses v. Macferlan in 1760 s. But academic circles rejected the case and the concept of quasi-contract because of the idea of ‘natural justice’ in it. At the end of 19 th century, due to the collapse of writ system, UK’s courts were forced to seek others foundations. Guiding by Commentaries on Laws of England written by William Blackstone, Sinclair’s Case(1914) accepted that there were only two causes of action(contract and tort). From then on, the theory of implied contract had been the only basis for reversing unjust enrichment.In the early 20 th century, UK academic circles found that there were many drawbacks in implied contract theory. In Westdeutsche Landesbank Girozentrale’s Case in 1996, the House of Lords abolished the theory of implied contract. Affected by the Restatement of the Law of Restitution: Quasi Contracts and Constructive Trusts(1937) approved by the American Law Institute, Goff and Jones issued the first book named The Law of Restitution, and this book accepted the principle of unjust enrichment and formed the UK’s restitution system for the first time. The principle of unjust enrichment was only officially accepted in English law in 1991 by Lipkin Gorman’s Case.Part 2(Chapter 2) introduces the formation process of modern law of unjust enrichment. Although Goff/Jones concluded the system of restitution before anyone else in UK, they shied away from clarifying the relationship between restitution and unjust enrichment. In order to make this up, Birks argued that it is necessary to distinguish ‘unjust enrichment as causative event’ from ‘restitution as response’. He also argued that ‘restitution’ properly belongs in a series of words denoting responses than then event. ‘Compensation, punishment, restitution, others’ is a properly aligned series, while ‘Contract, tort, restitution, others’ is not. He treats the unjust enrichment and restitution as forming perfect square, and issued ‘unjust enrichment by subtraction’ and ‘restitution for wrongs’. In 1989, Laycock claimed that the restitution is the sources of civil liability and remedy as well. This is the Multi-causality Theory. Birks accepted this opinion and fixed his earlier views. He thought unjust enrichment is only one of the most important reasons for restitution law. In 1998, he claimed ‘restitution should be replaced by unjust enrichment’ in his paper named ‘Misnomer’. In 2003, Birks became the first person who wrote books named ‘unjust enrichment’. In that book, he mentioned that these are coordinate categories of response to the series of causative events. When classifying rights, the first level is usually occupied by the division between property and obligations. The division according to causative events is placed on the second level. All the rights which we seek to realize in court arise from are either in rem or in personam, and one step down, all arise from distinct causative events: consent, wrongs, unjust enrichment, and others. Like the events in the other three, unjust enrichment is a causative event capable of generating both rights in personam, in the law of obligations and rights in rem, in the law of property. Birks used the words of ‘no basis’ to replace the concept of ‘unjust factor’, but this opinion is attacked by the whole academic circles.Part 3(Chapter 3-6) introduces requirements of unjust enrichment claim.Chapter 3 includes four aspects: enrichment, at the expense of claimant, unjust factors and defences.(1) There are two tests in identifying enrichment, and the objective test should prior to subjective test; in deciding whether the defendant has been enriched, law permits defendant to use the subjective devaluation rule; but if ‘incontrovertible benefit’ rule, ‘free acceptance’ rule or ‘defendant chose the benefit’ rule is applicable, the outcome of subjective devaluation rule will be refused by the court; the typical forms of enrichment are money, property, services, discharge of obligations.(2) ‘At the expense of claimant’ should be divided into two situations: in the case of right in personam, in principle, claimant must establish the direct transfer theory, but in exceptional cases, claimant can claim to the indirect recipient to restitute the benefit by interceptive subtraction rule. The processes of following and tracing are, however, distinct. In the case of right in rem, following is the process of following the same asset as it moves from hand to hand. Tracing is the process of identifying a new asset as the substitute for the old. Where one asset is exchanged for another, a claimant can elect whether to follow the original asset into the hands of the new owner or to trace its value into the new asset in the hands of the same owner.(3) The category of unjust factor should be divide into non-voluntariness and police-oriented.(4) In the case of justifying ground, there are five grounds: statues, judgments and court orders, natural obligations, counter-restitution impossible and contract.Chapter 4 and Chapter 5 introduce ten unjust factors. Chapter 4 discusses absence of intention, impaired intention, qualified intention, they include mistake, duress, exploitation of weakness, undue influence, failure of consideration, legal incapacity and ignorance. Chapter 5 discusses legal compulsion, necessity, public authorities’ ultra vires receipt.Chapter 6 introduces six defences: Change of position, Estoppel, Agency as a defence, Bona fide purchase, illegality and passing on. ‘Change of position’, ‘Estoppel’ and ‘Agency as a defence’ are used to respond to the change of circumstance of the defendant; ‘Bona fide purchase’ and ‘Illegality’ are used to decide whether or not the enrichment is unjust; ‘Passing on’ is used to decide whether or not the enrichment is at expense of the claimant.From the double perspectives of history and system, this paper argues that the law of unjust enrichment has four characteristics: currently in the transition period from ‘remedy law’ to ‘right law’; the development of unjust enrichment is promoted by doctrines and cases; pragmatism and conservatism are the ideology of unjust enrichment; unjust enrichment claim is a personal remedy and a proprietary remedy.