THE BORDERLINE BETWEEN CONTRACT AND UNJUST ENRICHMENT

The judgment of Mr Justice Beatson in Benourad v Compass Group plc [2010] EWHC 1882 (QB), [2010] All ER (D) 228 (Jul) contains a helpful summary of the principles which will be applied by a court when deciding whether or not negotiating parties have entered into a binding contract and, if they have not, whether one party may incur a restitutionary liability to the other as a result of services rendered by the other party.

The facts

The facts of the case are not of immediate concern to the construction industry and so we can deal with them quickly. The claimant was in business as a facilitator and introduction agent and he brought a claim in respect of business which he alleged that he had brought to the defendant. He alleged that there was a contract in existence between the parties which entitled him to commission and, alternatively, claimed that he was entitled to a reasonable fee for his services by way of a non-contractual restitutionary claim. Mr Justice Beatson held that no contract had been concluded between the parties and so he dismissed the contractual claim. In relation to the restitutionary claim he held that the burden was upon the claimant to establish his claim. In particular, he had to show what he had done in fact and what was reasonable. On the facts it was held that it was not possible to determine whether what he did went beyond work preliminary to a contract and was work for which he should be compensated. There was also no evidence as to what a reasonable fee would be for the introduction itself in a situation where it was not causative of the subsequent contractual arrangements. However, the lack of evidence was not entirely the fault of the claimant and so Beatson J concluded that he would hear further submissions on the fate of the claimant’s restitutionary claim.