Agreement and Restitutionary Liability for Mistaken Payments

Abstract

This chapter considers two recent attempts that claim a defendant’s actual or hypothetical agreement as grounds for restitutionary liability for mistaken payments. With respect to Alexander Georgiou’s attempt based on an actual but tacit agreement, we argue that his account: (1) confuses the motivating causes of the payment with the terms of the payment; (2) rests on a long chain of inference that raises doubt as to the general applicability of his argument to cases of mistaken payment; and (3) offers little guidance on when restitutionary liability should be imposed. With respect to Titiana Cutts’ argument, which is inspired by TM Scanlon’s idea of reasonable agreement, we argue that (1) the principles considered in her contractualist pairwise comparison are unduly limited; and (2) the considerations she takes into account in deciding between principles, such as the security of a party’s plans and the impact on people with limited means, are not specific enough for her conclusion. In particular, these considerations cannot explain why reasonable people must choose a principle that gives payors who paid upon a relevant mistake a general right to restitution, but not when they paid upon a misprediction.

Keywords: unjust enrichment, mistaken payments, agreement-based justification, contractualism

JEL Classification: K12, K19