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(B) ANTICIPATED AND INCOMPLETE CONTRACTS

Where the claimant and the defendant are negotiating a contract and, in the expectation that the contract will be made, the claimant incurs expenditure then, ifno contract is made either expressly or impliedly, clearly the claimant has no contractual remedy against the defendant, but he or she may be able to bring a restitutionary claim grounded on failure of basis.[1] [2]

Similarly, where the claimant transfers a benefit to the defendant pursuant to a contract which turns out to be incomplete. That such a restitutionary claim is available in this type of case was recognized by the Supreme Court in Benedetti v Sawiris.2 7 In that case the claimant had provided services for the benefit of the defendant anticipating that he would be paid under a contract which was not concluded. Although the decision of the Supreme Court was that the claimant could not recover from the defendant, because the defendant’s liability was considered to have been discharged by previous payments,[3] that the defendant was liable in unjust enrichment was accepted and Lord Reed specifically recognized that the ground of restitution was founded on failure of basis in order to correct ‘the injustice arising from the defendant’s receipt of the claimant’s services on a basis which was not fulfilled’.[4] [5]

Even with the endorsement of the Supreme Court, restitution in respect of anticipated contracts remains a controversial and difficult area of the law of restitution, primarily because of the care which must be taken in determining the boundaries between contractual and restitutionary claims. It is vital to ensure that the law of restitution does not subvert the law of contract. Consequently, if it is possible to identify an express contract or to imply a contract between the parties, the claimant should sue on the contract and not in restitution.2 0 So, for example, if there is a contract for the claimant to do specified work for the defendant and the defendant has requested the claimant to do work outside the contract, the claimant may be entitled to be paid a reasonable sum for the work done outside the contract by virtue of an implied contract. The danger, however, is that a contract is implied too readily in these anticipated and incomplete contract cases. This makes a mockery of the law through the introduction of fictional contracts. Consequently, where it is not possible to imply a contract between the parties in respect of the claimant’s performance,[6] simply because the state of the negotiations between the parties is such that it is not possible to determine what the terms of any such contract were intended to be, there will be scope to establish a claim in unjust enrichment instead, grounded on total failure of basis. Indeed, in Benedetti v Sawiris there had been no attempt argue that there was an implied contract between the parties governing the provision of the services by the claimant. But, even where a claim is brought in unjust enrichment, it is vital to ensure that a claimant who is considered to have taken the risk that no contract would be made should not be able to recover restitution. This is an area of the law where the principle that restitution is not available to the volunteer is of crucial importance.212

  • [1] For an extensive survey of the law and the issues arising see E McKendrick, ‘Work Done in Anticipationof a Contract which Does Not Materialise’ in W Cornish, R Nolan, J O’Sullivan, and G Virgo (eds), Restitution:Past, Present and Future (Oxford: Hart Publishing, 1998), ch 11. See also J Edelman, ‘Liability in UnjustEnrichment when a Contract Fails to Materialise’ in AF Burrows and E Peel (eds), Contract Formation andParties (Oxford: Oxford University Press, 2010), ch 9; R Havelock, ‘Anticipated Contracts that do notMaterialise’ [2011] RLR 72.
  • [2] [2013] UKSC 50, [2014] AC 938 . 208 See p 134, above.
  • [3] 209 Benedetti v Sawiris [2013] UKSC 50, [2014] AC 938, [99].
  • [4] 210 RTS Flexible Systems Ltd v Molkerai Alois Muller Gmbh [2010] UKSC 14, [2010] 1 WLR 753. See alsoBenourad v Compass Group plc [2010] EWHC 1882 (QB), [106] (Beatson J). S Hedley, ‘Work Done in
  • [5] Anticipation of a Contract Which does not Materialise: A Response’ in W Cornish, R Nolan, J O’Sullivan,and G Virgo (eds), Restitution: Past, Present and Future (Oxford: Hart Publishing, 1998), ch 12, considers thatliability in these cases should simply turn on whether or not there was an agreement to pay for the work done.See also S Hedley, Restitution: Its Division and Ordering (London: Sweet and Maxwell, 2001), 62; P Davies,‘Contract and Unjust Enrichment: A Blurry Divide’ (2010) LQR 175.
  • [6] Whittle Movers Ltd v Hollywood Express Ltd [2009] EWCA Civ 1189. 212 See p 36, above.
 
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