'The Intellectual History of Unjust Enrichment' in (2020) 133
Harvard Law Review 2077
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the intellectual history of unjust enrichment, showing that many legal systems in the Western tradition identify unjust enrichment as a source of personal obligation separate from contract or tort. In the United States, unjust enrichment developed in law and equity, suffered through a period of instability in the post-fusion legal landscape, and has experienced a recent resurgence. The idea of “unjust enrichment” researched for this Chapter includes any treatment of an unequal transfer of value that operates as a source of obligation separate from obligations arising from consent or wrongdoing. This separate source of obligation can be identified as far back as the Roman Empire. The definition of “unjust enrichment” that seems to best fit this source of obligation is that of the Third Restatement: any unequal transfer of value without an adequate legal basis.
Given that both contract and tort are sources of obligation recog- nized within the common law tradition, one might think that unjust enrichment would fall squarely within the common law, but the story is more complex. The American legal tradition inherited the English distinction between “common law” and “equity.” Although separate com- mon law and equity jurisdictions were mostly abolished by the early twentieth century, American courts have struggled to determine how much to “fuse” them. Unjust enrichment developed as a common law source of obligation and as an equitable principle, and it now occupies an uncomfortable space in American jurisprudence. In some ways this is surprising, since unjust enrichment would seem to be the prime candidate for perfect fusion.
However, the half steps taken by the American fusion of law and equity, and the particularities of how this fusion occurred, have contributed to uncertainty about how to employ unjust enrichment.
The confusion over characterization has impacted plaintiffs who might be in a position to bring an unjust enrichment claim. After the fusion of law and equity, unjust enrichment was predominantly categorized as “equitable.” This label has caused unjust enrichment to become unpopular and misunderstood in the United States, in contrast to the vibrant unjust enrichment scholarship in other countries. Some state courts, misinterpreting unjust enrichment as a purely equitable claim, have put up barriers, such as the rule that equity does not step in if there is an adequate remedy “at law.” This Chapter will highlight better theoretical approaches to unjust enrichment in a post-fusion world.
Section A explores the early common law and equity roots of unjust enrichment in the Western tradition. Section B demonstrates that pre-1900 American jurisprudence employed the doctrine in common law and equity courts. Section C explores attempts to fuse the law and equity sides of unjust enrichment and misapplication of these attempts after the fusion of law and equity in the United States. Finally, section D addresses recent developments here and abroad, as well as different options for theorizing unjust enrichment in the post-fusion landscape.
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In England, judges and scholars concen- trated on defining the source of the obligation itself, treating unjust enrichment as a legal concept and as its own category of law. The first judicial recognition of “unjust enrichment” took place in 1942, in Fibrosa Spolka Akcyjna v. Fairbairn Lawson Combe Barbour, Ltd., by Lord Wright, a judge who had written a glowing review of the First Restatement of Restitution a few years earlier. The court case involved a Polish company that paid for machinery from Britain but never received the product because of the outbreak of war. Lord Wright found that an obligation to return the payment to the Polish company arose from the circumstances: “The obligation is a creation of the law, just as much as an obligation in tort. The obligation belongs to a third class, distinct from either contract or tort, though it resembles contract rather than tort.” Lord Wright contended that “any civilized system of law is bound to provide remedies for cases of what has been called unjust enrichment.”
Despite Lord Wright’s 1942 recognition of unjust enrichment, English courts largely rejected the principle until the 1990s. Academics like Professors Robert Goff, Gareth Jones, and Peter Birks were critical in bringing unjust enrichment to England and Commonwealth countries. They viewed unjust enrichment as a “principle of justice which the law recognises and gives effect to in a wide variety of claims.” Goff explained, “I see the law of restitution gradually developing towards the acceptance of a fully-fledged principle of unjust enrichment ... with the emphasis changing from the identification of specific heads of recovery to the identification and closer definition of the limits to a generalized right of recovery.”
Birks continued this project by advocating strenuously that unjust enrichment must be viewed as a causative event different from contract and tort. Birks argued that “restitution” must mean “gain-based recovery” and that this gain-based remedy can arise from contract, tort, and fiduciary relationships, as well as from unjust enrichment. In Birks’s view, the works of Scott and Seavey, Goff and Jones, and Palmer had attempted to address all instances of cases where the law provided a “gain-based recovery.” Birks proposed instead that:
[E]very right which can be realized in court arises either from a manifestation of consent such as a contract or independently of consent, as from a wrong, from an unjust enrichment (in the narrow sense) or from some other event. ... [Unjust enrichment] includes only those enrichments at the expense of the claimant in which the reason for restitution is not contract or wrong. In other words, it includes mistaken payments and all other events materially identical to that central figure.
Birks’s perspective was that unjust enrichment never occurred as a result of a wrong. If the wrongdoing is considered the causative event, then the source of obligation is the wrong, and the claim should be resolved with the law of tort. When a gain-based remedy is given due to wrongdoing, “[i]t is not the law of unjust enrichment which steps in. It is the law of restitution operating within the law of the wrong itself. Restitution is gain-based recovery. All that is happening is that gain-based recovery is made available for the wrong.”
Perhaps as a result of the focus on the source of obligation in unjust enrichment, the doctrine has become popular in the Commonwealth countries. Professor Chaim Saiman has also highlighted the extensive doctrinal treatment of unjust enrichment in English courts as an important factor in unjust enrichment’s vibrancy overseas.
