Scots law limits

In various ways Scots law limits the availability of enrichment remedies where there is a contract. It is obvious that a contractual arrangement of this performance for that price cannot be upset by a claim on either side that the other is enriched under the contract. Fair pricedoctrines long ago evaporated in Scots law, if they were ever part of it. The Clive 'code' of unjustified enrichment follows the existing law when it provides that an enrichment is justified and irrecoverable if the enriched person is entitled to it by virtue of a contract.

It has recently been held in the Inner House that even 'windfall' gains which can be traced to contractual entitlements do not constitute enrichment. 1 There is also a rule clearly articulated in the cases that where there is a valid subsisting contract there can be no claim in recompense. 2 Connelly v Simpson 3 is authority for the proposition that, apart from frustration, the condictio causa data causa non secuta is not available in cases where there is a contractual relationship between the parties; a view propounded vigorously and persuasively both before and after that case by Robin Evans Jones.

4 In the great case of Morgan Guaranty Trust Co v Lothian Regional Council5 Lord President Hope stated that the orderly development of Scots enrichment law would be best served if in general there were not different rules to be applied in each of its remedies without clear justification. Let's see if there is any liability at all which could not be described as an example of 'unjust enrichment'? The trouble with 'unjust enrichment' is not that it does not exist, but on the contrary that it is everywhere.

Whenever X declines to pay Y a sum which justice demands X should pay, we can straightforwardly say that X is 'unjustly enriched' to the extent of the payment. Where, then, do we find limits to restitution? To the 'miscellany' school, the only limits we should expect to find are those posed by the presence of established areas of law. If I decline to pay you for goods you have sold me, there is no reason why my liability cannot be described as one for 'unjust enrichment'.

I have obviously been unjustly enriched, and only my handing over the price can render that enrichment just. We chose not to describe the case this way, but that is because this question is dealt with by the law of contract The limits of 'restitution' are therefore conventional only. What limits can 'unjust enrichment' theorists place on their subject, other than that 'the recognition that the beast is free does not preclude the assertion that it should be respectful of its neighbours' (Barker 1995a, p 459)?

'Unjust enrichment' theorists have not exercised any particular restraint in the way they have used their concepts, and so are poorly-defended from the charge that they could include anything. They do not confine themselves to cases where the defendant is still in profit by the time of the action, for it seems that a defendant may be 'unjustly enriched' even though he is not a penny better off. Again, a defendant may (in the opinion of most writers) be 'enriched' by the receipt of worthless services (see for example Tettenborn 1996, p 6).

Indeed, an incompetent trustee who contracts debts he cannot pay apparently 'enriches' his beneficiaries by so doing (Burrows 1993, pp 83-84)! The flexibility of the concepts being used is manifest; and indeed, some 'unjust enrichment' theorists would go still further, arguing that so long as the defendant is in some sense enriched, the liability need not take the form of removing the enrichment, but can consist of some other just response. Plainly, this theory could grow to embrace everything.

Either 'enrichment' needs more careful definition, or the idea that it can police the outer boundary of restitution must be abandoned. Of course, some liabilities are a great deal easier to regard as examples of 'unjust enrichment' than are others. The problem is that, having allowed the definition of 'unjust enrichment' theory to grow, yet also demanding a precise definition of liability, it is clear that something has to give. Much of property law could easily be described as concerned to remove 'unjust enrichment'.

Indeed, if we take the law's allocation of property rights as settled and unchallengable (as law books tend to do), then most departures from that allocation produces an enrichment that is unjust. But this is not how the 'unjust enrichment' theorists want it, for they seek to separate out their own area; and their cases cannot be 'property' cases, for if they were, they would not need an explanation by means of 'unjust enrichment'. So the most promising examples of liability for unjust enrichment are ruthlessly discarded by the 'unjust enrichment' school.

Considerations of restitution for services have persuaded some that restitution is simply about the protection of property. If I lose my property, and its proceeds end up with you, then it is unsurprising that I have a remedy, and this remedy should properly be regarded as protecting my property rights. 'Unjust benefit' is neither necessary nor complete to describe it: to the limited extent that property rights guard against 'unjust benefit', every property rule protects against unjust enrichment, not just the narrow band which 'unjust enrichment' theorists treat as their own.

'Unjust enrichment' theorists have many answers to this, but a major one is to assert that remedies are available not merely for the protection of property, but also for services unjustly appropriated or at least not paid for. It is of course possible to treat services as a variant of property, but this involves extreme artificiality. The question is, therefore, whether there is such a thing as 'restitution for services' and if so whether it can be treated as part of 'unjust enrichment' theory.

There is great confusion amongst 'unjust enrichment' theorists as to how to conceptualise services, or to say when they are 'enriching' (Hedley 1995, p. 596ff). But is there, in fact, any case-law to explain? There are of course many examples of marine salvage, but it now seems to be accepted by the theorists that these are not really reducible to any 'unjust enrichment' theory, or at least not the same one as is promoted generally (Birks 1985a, pp 307-308).

As I have described elsewhere (Hedley 1997), there are about a dozen other reported instances of restitution for services. They are of a highly miscellaneous nature; it has proved very difficult indeed to fit them into the structure of 'unjust enrichment', a point which the theorists have acknowledged, even though they tend to blame the judges themselves rather than the theory. It is far from obvious that there is anything here that needs explanation, or that 'unjust enrichment' is the tool to do it with.

The status of 'restitution for services', then, remains unclear; indeed, some theorists are retreating altogether from the idea that liability for services needs an explanation in terms of unjust enrichment. Steve Hedley postulates a proprietary theory. 6 He argues that the real question is to what extent a donor has to realize what she is doing before a donor is treated as having formed an effective intention to pass property. Only extreme misperceptions on the donor's part should have the effect of failing to pass property.

Two instances of such misperceptions are mistake as to the amount transferred and mistake of the identity of the donee. Hedley does not think that it is helpful to analyze the law with reference to mistake. According to Steve Hedley in discussing the anticipated contract cases, "nearly everything is contractual. What little can not be explained by contract cannot be explained by unjust enrichment theory either. Therefore, unjust enrichment theory has nothing to contribute to this area. "