The Restitutionary Conditional Transfer Analysis and the Death of Contract

Abstract

There is an important distinction in the law of restitution between a claim for restitution for unjust enrichment by subtraction, where the plaintiff has made a transferto the defendant that is non-voluntary, and a claim under the benefit principle for reasonable paymentfor a benefit conferred. The benefit principle has a limited scope ofapplication, because generally payment for benefits conferred is governed by the law of contract. The restitutionary conditional transfer analysis, by mischaracterising a transfer made subject to a condition as an example ofsubtractive restitution, and treating performance ofa contract as a conditional transfer, has the perverse effect ofimporting the benefit principle into contract law. This subverts the remedial rules ofcontract law by allowing the court to assess a reasonable payment for work done rather than relying on the contract to determine the appropriate liability. The claims on contractual termination that are regarded as restitutionary— the quantum meruit for work done and the claim for repayment of a pre-payment— can be explained without reference to the conditional transfer theory. The claim for repayment of a pre-payment should be limited to cases of complete failure of consideration, which should be understood to mean complete absence ofreliance by the defendant on the contract, not complete absence ofbenefit to the plaintiff.