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(C) IDENTIFYING THE ENRICHMENT

Where the claimant wishes to seek restitution of a benefit which has been transferred to the defendant as a result of the defendant’s exploitation of the claimant’s weaker position, the enrichment will usually be in the form of money. But it is possible that, as a consequence of the defendant’s exploitation, the defendant will have received nonmonetary benefits from the claimant, such as goods or even services.[1] Restitution will be available by reason of the exploitation, regardless of the type of enrichment received by the defendant, although with goods and services the question of whether or not the defendant has actually been enriched may be more difficult to establish.[2]

(D) VITIATION OF TRANSACTIONS FOR EXPLOITATION

Usually the effect of the defendant’s exploitation is that the claimant enters into a transaction with the defendant and transfers a benefit to him or her pursuant to it. If the claimant is to recover such benefits it is first necessary to establish that the transaction has been set aside by reason of the exploitation. This is because of the principle that restitutionary remedies will not be awarded to subvert transactions which provide a legitimate legal basis for the defendant’s receipt of the enrichment.[3] These transactions will usually involve contracts, but they may also involve voluntary dispositions such as gifts.[4] The courts are more prepared to set aside gifts for exploitation than they are to set aside contracts.[5] This accords with the general policy of the law which is to uphold agreements wherever possible and only to set them aside exceptionally. Gifts are more readily set aside for another reason, namely that where the claimant has made a gift to the defendant without receiving anything in return this suggests that the claimant might have been exploited by the defendant.

Most of the cases which arise in the context of exploitation are concerned with the vitiation of contracts. The effect of exploitation of the claimant by the defendant is to render the contract voidable, [6] so if the claimant wishes to set it aside he or she must rescind it through the operation of the equitable jurisdiction.[7] As a consequence of rescission the defendant must make restitution to the claimant of any benefits which he or she had received pursuant to the transaction and the claimant will be required to make counter-restitution to the defendant of the value of any benefit which the claimant had received.[8] These restitutionary consequences of rescission can be explained by reference to the unjust enrichment principle, for without restitution the defendant would become unjustly enriched at the claimant’s expense as a result of the contract being rescinded.[9]

  • [1] See O’Sullivan v Management Agency and Music Ltd [1985] QB 428 where the claimant successfullybrought an action for restitution in respect of services received by the defendant as a result of undue influence.
  • [2] See Chapter 4. 7 See Chapter 7.
  • [3] 8 See, for example, Allcard v Skinner (1887) 36 Ch D 145 and Louth v Diprose [1992] 75 CLR 621.
  • [4] 9 Wright v Carter [1903] 1 Ch 27, 50 (Vaughan Williams LJ). See also the different tests for setting aside
  • [5] contracts and deeds for the disposition of gifts for mistake. See p 192, above.
  • [6] Save where the contract is already void, for example by virtue of illegality. See p 286, below.
  • [7] On rescission generally see p 21, above. Rescission is subject to the usual bars of affirmation, lapse of time,intervention of third parties, and counter-restitution being impossible.
  • [8] O’Sullivan v Management Agency and Music Ltd [1985] QB 428. See also Cheese v Thomas [1994] 1 WLR129 and Mahoney v Purnell [1996] 3 All ER 61.
  • [9] See p 24, above. 14 See p 275, below and Chapter 19. 15 See p 438, below.
 
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