Restitution CASES
In English law, restitution is a legal remedy designed to restore parties to their original positions by reversing unjust enrichment or benefits improperly gained at another’s expense.
Definition and Principles
Restitution addresses situations where a party unjustly receives benefits or money, requiring them to return or compensate for those benefits to prevent unfair advantage or enrichment.
Grounds for Restitution
- Unjust Enrichment: Gaining benefit without legal justification.
- Mistake: Payments or transfers made in error.
- Failure of Consideration: Where expected contractual benefits do not materialise.
- Duress or Undue Influence: Improperly obtained payments or benefits.
Common Applications
Frequently used in contract and quasi-contract scenarios, particularly where contracts are void, frustrated, or where services or goods are mistakenly provided without valid contractual grounds.
Practical Importance
Restitution ensures fairness, preventing unjust retention of benefits, and encourages transparency and accountability in commercial and personal transactions.
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Ship owners paid money into a union's welfare fund under threat of their ship being 'blacked' and prevented from sailing. They sued successfully to recover the payment, claiming economic duress. The case established a key test for economic duress. Facts The appellants, Universe Tankships Inc of Monrovia, owned the ship ‘The Universe Sentinel’. While it was docked at Milford Haven, the respondent union, the International Transport Workers Federation (ITF), ‘blacked’ the ship. This meant tugs would not service the vessel, preventing it from sailing. The blacking was part of ITF’s policy to improve the poor pay and conditions of crews
A property developer incurred substantial costs during 'subject to contract' negotiations for a development project. When the other party withdrew, they sought restitution for these expenses. The court held that such pre-contractual costs are a normal commercial risk and not recoverable. Facts The London Dockland Development Corporation (LDDC), the defendant, invited tenders for a licence to develop a valuable site in Wapping. Regalian Properties Plc, the plaintiff, submitted a proposal and was selected as the preferred bidder. All subsequent negotiations for the final building agreement were conducted explicitly on a ‘subject to contract’ basis. During this period, and as a
Promoters Gamerco sued to recover a $412,500 advance paid for a Guns N' Roses concert. The contract was frustrated when authorities declared the venue unsafe. The court ordered the full repayment, declining to let the defendants retain any funds for their expenses. Facts The plaintiffs, Gamerco SA, were Spanish concert promoters who entered into a contract with the defendants, the agency for the band Guns N’ Roses, to hold a concert at the Vicente Calderón Stadium in Madrid on 4th July 1992. In accordance with the contract, Gamerco paid an advance of US$412,500 to the defendants. Shortly before the concert
A Polish company paid an advance for machinery from an English company. The contract was frustrated by the outbreak of WWII. The House of Lords held the Polish company could recover its advance payment due to a total failure of consideration. Facts In July 1939, the appellants, Fibrosa Spolka Akcyjna (a Polish company), entered into a contract with the respondents, Fairbairn Lawson Combe Barbour, Ltd (an English company), for the purchase of certain machinery for £4,800. Delivery was to be to Gdynia, Poland. Per the contract terms, the appellants made an advance payment of £1,000. However, on 1 September 1939,
Facts Cleveland Bridge and Engineering Co Ltd (CBE) were contracted to construct the steel framework for a building in Jeddah, Saudi Arabia. They required a significant quantity of specialised cast steel nodes for this project. CBE sent a ‘letter of intent’ to British Steel Corp (BSC) requesting that BSC commence production of these nodes immediately, in anticipation of a formal contract being finalised. Negotiations on the formal contract proceeded but ultimately failed. A key point of contention was the liability clause; BSC insisted on a clause excluding liability for consequential loss arising from late delivery, whereas CBE sought to impose
