Lloyd's Maritime and Commercial Law Quarterly
SERVICES RENDERED UNDER INEFFECTIVE CONTRACTS
By J. W. Carter*
I. INTRODUCTION
A. Object and scope of this paper
The main purpose of this paper is to highlight the important issues in relation to restitution for services rendered under ineffective contracts. That involves two things: an explanation of the bases for restitution; and an analysis of the recent cases and literature on the theory of restitution in this area.1
I intend to concentrate on what I regard as the focus of the word “ineffective”, namely situations where from its inception the contract suffered from a defect such as failure to agree, uncertainty or failure to comply with a requirement of form. Discussion of contracts discharged for breach or repudiation, usually dealt with under the rubric of ineffective contracts, is therefore somewhat briefer.
Thus, the four areas with which I mainly deal are:
- (1) anticipated contracts which fail to materialize;
- (2) contracts which are void rather than merely unenforceable;
- (3) contracts which are unenforceable (due to statutes such as the Statute of Frauds); and
- (4) contracts discharged for breach or repudiation.
B. Unjust enrichment and quantum meruit
In the context of ineffective contracts there can be no doubt that unjust enrichment has a strong claim for being a complete explanation for restitutionary claims that are allowed and those which ought to be allowed. That is to say, where the plaintiff seeks to recover in respect of a benefit conferred under an ineffective contract, the issue is whether the defendant has obtained a benefit at the expense of the plaintiff in circumstances where it would be unjust not to respond to the benefit by ordering restitution. The theme of this paper is that unjust enrichment is a viable explanation for restitution in this context in almost all situations. However, I do question some of the refinements of the unjust enrichment theory and suggest that the con-
* Senior Lecturer in Law, University of Sydney; General Editor, Journal of Contract Law.
1. For a more detailed analysis, see J. W. Carter, “Ineffective Transactions”, paper presented at Restitution Seminar, Australian National University, Canberra, 8–10 September 1989, from which I have borrowed extensively in preparing this paper.
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