(iv) Estoppel

The preferable explanation of the defence is that it is founded on estoppel. According to this explanation the agent will continue to be liable to the claimant unless the claimant can be estopped from bringing a restitutionary claim against the agent. Such an estoppel would be established if the claimant knows that he or she is dealing with an agent and so authorizes the transfer of the benefit to the principal.^[1] This does at least explain why the defence only operates where the principal has been disclosed, but it does not explain why the defence operates even where there has been no detrimental reliance. Consequently, this must be a form of estoppel where it is sufficient that the agent has relied on the claimant’s representation so that the agent transferred a benefit to the principal, it not being necessary to show that the agent suffered any detriment as a result.

• [1] WJ Swadling, ‘The Nature of Ministerial Receipt’ in PBH Birks (ed), Laundering and Tracing (Oxford:Clarendon Press, 1995), 257-9; Grantham and Rickett, ‘A Normative Account of Defences to RestitutionaryLiability’, 110.