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Lionel Smith
Fri, 19 Dec 1997 15:49:11


If I may intervene ...

Allan Alexrod wrote:

does someone get to say 'this correspondence must now cease'? and i assume we will happily give this to our moderator?

I would not quite want to say that; it is an interesting dialogue (or dialog) and to some extent replicates one which Mr Hedley and Prof Birks have been having since at least 1985 (see (1985) 5 Legal Studies 56 (Hedley) and 67 (Birks) [NB Legal Studies is the SPTL's journal, not the JLS from U of Chicago]) and which they continue to carry on (see Hedley [1997] 3 Web JCLI, at http://webjcli.ncl.ac.uk/1997/ issue3/hedley3a.html, and Birks in Birks ed., *Classification of Obligations* (Oxford, OUP, 1997)).

Far from trying to stop the thread (which I would only want to do if it was starting to get repetitive), I would like to contribute to it.

Allan said:

as to whether there is a law of restitution classed by creative event we agree that the question is whether the classification is useful and other members of the group still awake might choose to address that

I think the first point is very important. We must be clear as to what we are fighting about or we may find out that there has been no point to the disagreement. There are at least three classifications in play. One is contextual, eg "commercial law" which has elements of contract, property, tort, trusts, agency etc (a list which itself arguably uses all three different classifications). The second is by response, in which "restitution" goes with compensation, punishment, symbolic vindication (nominal damages). (And possibly "disgorgement." If we understand "restitution" to be about reversing a transfer of wealth (thus taking notice of both defendant's gain and plaintiff's loss) then we must distinguish taking away a gain without regard to whether it corresponds to a plaintiff's loss, which we could call "disgorgement".) "Tort" does not belong in this scheme because tort is something which generates the items on this list. The third is by creative event. Wrongs, consent, unjust enrichment, others. In this sense "unjust enrichment" does not include eg taking away fiduciaries' profits; that is disgorgement for a wrong. "Tort" is a subcategory of "wrongs."

It is also important to notice that "consent" does not equate to "contract." When I wrote

IF (which some will contest)legal responses can be said to arise from wrongs, consent, unjust enrichment, and other causes, THEN while enforcing a contract is a response deriving from consent, setting one aside is not necessarily so.

Steve Hedley replied:

You seem to be assuming that "the law of contract" is reducible purely to issues of consent, and that issues such as (say) unjust enrichment are irrelevant to it. Yet what scholar of the law of contract believes this ?

But I actually did not use the phrase "the law of contract" nor make any claim about the utility of that phrase or its possible content. Obligations generated by consent include most contractual obligations but they also include eg the obligations of an express trustee (cf Langbein (1996) 105 Yale LJ 625).

We could use any or all of these three systems of classification but it is perilous to mix them unconsciously. If a student was asked what he was studying in a particular semester he might say "restitution, tort, and commercial law." No one would bat an eyelash. But if a student was asked what she was studying in a term and answered "imprisonment, theft, and chattel law" then a different view might be taken. Yet the series are parallel.

I think Steve takes the view that "the law of contract" is a contextual category as I have used that phrase. Thus it includes things not generated by consent. That is a perfectly defensible usage but if others understand the phrase differently and the differences are not brought to the fore confusion must follow. I think others do understand it differently, and a view that "the law of contract" includes only obligations generated by consent is also defensible.

So part of the controversy can be understood as which of these three systems of classification is most useful. But another part of it can be understood as taking place within a classification based on causative event. That is the issue about whether unjust enrichment is properly a category within that classification. Steve said

And aren't the formation and enforcement of contracts something to do with unjust enrichment, too ?

In another place ((1984) 100 LQR 697) Steve said: "The Law of Restitution can only suffer if the words "unjust," "enrichment" and "expense" are sometimes treated as bearing their everyday meanings and sometimes as technical terms." Amen to that. I would suggest that Steve is using two of those words in their everyday meanings when he suggests that the formation and enforcement of contracts have something to do with unjust enrichment. What I think is the emerging consensus all over the Commonwealth (building upon the US experience), among academics and judges, is that there is a technical sense of the phrase "unjust enrichment." In that sense it is a source of obligations (and perhaps of proprietary rights). It is a cause of action or a family of causes of action. On that terminological choice (which I do not claim is anything but a choice, albeit a very useful and increasingly popular one), then the formation and enforcement of contracts have absolutely nothing to do with unjust enrichment. Steve appears to take the view that the phrase "unjust enrichment" does not deserve to have a technical meaning, as it does not reliably identify anything. That may be a defensible view but it is I think now a minority view.

Allan also wrote:

your note confirms my nervousness about participating in this group upon which i have stumbled and in which i seem to be the only american participant

I can say that you are not the only American member of the list. Whether we will hear from others is outwith my control.



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