The Commercial Triple Helix: Contract, Property and Unjust Enrichment

in P. Devonshire and R Havelock (eds), The Impact of Equity and Restitution in Commerce (Hart Publishing), Forthcoming

University of Cambridge Faculty of Law Research Paper No. 7/2018

27 Pages Posted: 17 Jan 2018

See all articles by Sarah Worthington

Sarah Worthington

University of Cambridge - Faculty of Law

Date Written: January 1, 2018

Abstract

This chapter revisits some of the enduring controversies affecting the interface between contract, property and unjust enrichment. Unless these controversies are settled satisfactorily, the framework for commercial law will be weak. Having trawled through the detail, four points are made to assist analysis in these areas:

1. Property questions must be answered before liability questions. The location of legal title and the existence of derivative interests (both common law possessory interests and equitable security and trust interests) must be settled before considering liability questions.

2. Within liability questions, contract law and tort law are concerned with individuals; unjust enrichment law and trust law are concerned with assets. Remedies respectively 'restore' either the 'parties' or the 'assets' to what would have been their standing absent the failings that have occurred. The difference in focus has important practical consequences.

3. Unjust enrichment law and trusts law are not concerned with assets generally, but with entitlement to the economic benefit of those assets. That is plain with trusts. Similarly, unjust enrichment law seeks to allocate the economic benefit of an asset to the person entitled to it. If the asset is identifiable, then the assertion itself describes a trust. It follows that unjust enrichment remedies should be proprietary whenever the property in question is identifiable. In addition, notice that the goal of both trusts law and unjust enrichment law is not to deliver an asset to the claimant, but to deliver 'the economic benefit of the asset' so far as the defendant has it. This inherently acknowledges that the relevant assessment in both cases is qualified by a change of position defence.

4. Finally, but going against the current trend in the cases, it is suggested that restitution for unjust enrichment should only be available to claimants who remain entitled to the economic benefit of their previously owned assets notwithstanding that legal title has been transferred elsewhere. On this basis, not every mistaken transfer warrants a legal remedy. Restitution, it is suggested, ought to be available only where the claimant's consent to the transfer was vitiated (adopting the same test for that as is adopted in contract law) or where the objective conditionality of the transfer has failed totally (most typically where the transfer was intended to meet a liability when none existed, or where Quistclose-style purposes were settled and have not been carried out). This more restrained approach would eliminate a good number of difficult boundary issues between contract, property and unjust enrichment, as exemplified by the familiar gas board customer who appears from the start of this chapter.

In summary, this chapter ignores the detail of individual commercial doctrines, and instead takes a step back to examine the broad tensions at the boundaries of contract, property and unjust enrichment. One of the foundational problems in commercial law is how to wind together these three strands — contract, property and unjust enrichment — into a strong and effectively functioning structure. At present, there are still too many unresolved conflicts. Perhaps there could be fewer if these four points were noticed.

Keywords: commercial law, private law, unjust enrichment, equity, property, equitable compensation, priority

Suggested Citation

Worthington, Sarah, The Commercial Triple Helix: Contract, Property and Unjust Enrichment (January 1, 2018). in P. Devonshire and R Havelock (eds), The Impact of Equity and Restitution in Commerce (Hart Publishing), Forthcoming , University of Cambridge Faculty of Law Research Paper No. 7/2018, Available at SSRN: https://ssrn.com/abstract=3103048 or http://dx.doi.org/10.2139/ssrn.3103048

Sarah Worthington (Contact Author)

University of Cambridge - Faculty of Law ( email )

10 West Road
Cambridge, CB3 9DZ
United Kingdom

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