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Steve Hedley
Fri, 19 Dec 1997 19:25:32


I suspect terminology is indeed at the root of it.

To my way of thinking, the introduction of new terminology which changes the legal position needs the same scrutiny as new legislation.

At 15:49 19/12/97 +0000, Lionel Smith wrote:

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" s a subcategory of "wrongs."

A rather elaborate classification, if I may say so. What is its purpose ?

Any number of distinctions *can* be drawn. But for what end ?

It is one thing to draw a distinction and quite another to use it. I will use the classification you mentioned if any useful purpose seems to be served by it, but not otherwise. To require that all legal argument needs to be structured around it is a strong claim indeed - it is as if you claimed that a man's left side is distinct from his left side, and then went on to insist that therefore he will feel no pain if cut down the middle.

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).

And yet others on the list had no hesitation in concluding that you were making a claim about the law of contract, as against the law of unjust enrichment - isn't that interesting ? For example, Peter Birks commented that

Lionel must be right. The right to rescind can only belong to contract in a contextual sense. That is, it belongs in the law which is about contract. When we look at the events from which rights arise, we can rarely derive a right to rescind from contract ...

.... it does not seem incorrect to attribute the right to rescind the security to unjust enrichment.

The law is all one thing. By all means concentrate your attention on one aspect of it at a time, but do not suppose that what you do in one area does not affect what happens in another. You can have profound effects on the law of contract without its being anywhere in your thoughts - indeed, it may be affected precisely because you did *not* ask yourself about it.

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.

Nor should they, despite the student's obvious failure to apply your classification (mixing up your first and your second category)..

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.

Indeed. Both statements fail your requirements of logical consistency. Yet the first statement is faultless and the second is goobleydegook. This story has important implications about the relevance of logical coherence. "Perilous" to mix categories - Why ? Explain to the first student the dangers he is running, if you really think he is. The dangers the second is running are more obvious.

I think Steve takes the view that "the law of contract" is a contextual category as I have used that phrase.

I don't think I should try the patience of the list by trying to define my own approach to contract precisely. Suffice to say that I am not sure I even understand what it would mean to claim that contract is or isn't contextual in this sense.

This is one of the dangers of rigid terminological schemes : they close off options. You are boxing yourself in so that certain claims cannot be made. If your approach had been at all common 20 years ago, then neither Patrick Atiyah nor Hugh Collins nor Charles Fried could have written what they did on contract : Atiyah and Collins would have been told that their works were internally contradictory, and Fried would have been told that his work consisted wholly of circular assertions. Yet no-one understands their work that way.

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.

As to what is the majority view and what is minority, I think you need to look rather closer at the nature of the support for unjust enrichment. Much of it is premised on the (natural) assumption that the words mean something close to their natural meaning. That is precisely why I surveyed the use of "unjust enrichment" in law reports using LEXIS for my [1995] CLJ article; it is manifest that those judges who use the expression at all do not have any very technical meaning in mind. How many judgements can you recall that even *name* any unjust factors, let alone use them ? If practitioners refer to "restitution", what are the odds that they will be talking about something which academics will regard as part of the subject, as distinct from some compensatory notion ? How many judges recognise any inconsistency basing a restitutionary claim on unjust enrichment and basing it on an implied contract ?


Steve Hedley

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