Unjust Enrichment

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SRN: 080162119        School of Law

Introduction

The restitutionary principle of free acceptance (“FA”) was first introduced by Goff and Jones in their first edition of The Law of Restitution.   Although this principle has been recognized in the English law of unjust enrichment,  its existence and function remain controversial.   In my essay I will critically assess the operation and roles of FA in the restitution of unjust enrichment, and conclude my essay with my stand that FA has a limited role in the English law of unjust enrichment.

Free acceptance – its operation and roles explained

A person can be liable to pay for services if he has “freely accepted” them.   According to Goff and Jones FA arises where the defendant as a reasonable man, should have known that the claimant who rendered the services expected to be paid for them, and yet he did not take a reasonable opportunity open to him to reject the proffered services. 

More recently, Professor Birks has with added refinement, reiterated that FA occurs where a recipient knows that a benefit is being offered to him non-gratuitously and he, having the opportunity to reject, elects to accept.   Virgo illustrated Goff and Jones and Birks’ FA into a three-part test: (1) the defendant had the opportunity to reject the service or goods before it was provided; (2) the defendant knew that the claimant expected something in return for the benefit; and (3) the defendant failed to reject the service or goods. When all elements are fulfilled, the defendant is said to have freely accepted the benefit.

FA is regarded as having a dual function in the law of restitution.  This dual function involves FA operating both to establish an enrichment and as a ground of restitution in its own right.  To be able to succeed in a claim under the English Law of unjust enrichment the claimant has to prove three requirements: - (i) a benefit must have been gained by the defendant; (ii) the benefit must have been obtained at the claimant’s expense; and (iii) there is an “unjust factor” rendering it unjust for the defendant to retain the benefit. Goff and Jones and Birks believed that FA is unique because it acts as a means to ascertain whether the (first) three ingredients to establish an unjust enrichment claim are satisfied, namely in establishing a benefit or enrichment ((i) and (ii)); and functioning as an unjust factor to bring a claim.

My essay will now focus on the discussion of this dual function of FA. As mentioned earlier, FA is supposed to be sufficient to establish that the defendant has been enriched.   It is worth noting that the defendant can be deemed to have freely accepted a benefit regardless of whether he had or had not requested it, since it is sufficient that the defendant knowingly acquiesced in the provision of the benefit. 

In situations where the defendant receives money (or benefits expressible in money), it is usually straightforward that the defendant has been incontrovertibly benefited – which no reasonable man would deny that the money benefits him – and no issue of FA is involved. Difficulties arise, however, with benefits in kind, that is services and goods, which the defendant can “subjectively devalue” by stating that they have no value to him.

The claimant would then have to find some way of defeating the defendant’s reliance on the subjective devaluation principle. There are two main methods of overriding subjective devaluation, namely through the principle of incontrovertible benefit and FA. Briefly, the defendant will be able to subjectively devalue using the incontrovertible benefit notion, if it can be shown that the defendant was likely to pay someone for the service or goods received and hence the claimant had saved the defendant a factually necessary expense.   If this cannot be established, the burden of proof is on the claimant to succeed in his claim by evidencing that the defendant had freely accepted the benefit. This would be established if the claimant can prove all the three conditions argued by Virgo as mentioned above have been satisfied.

Whether the defendant had freely accepted the benefit is only significant where the defendant seeks to argue that the benefit received has no value to him.  It follows that the function of FA is not to show that the defendant did positively value the benefit but, rather, to prevent the defendant from subjectively devaluing it after having freely accepted it. Again to quote Birks, “a defendant who has freely accepted the benefit cannot use [the subjective devaluation] argument.   The reason is that, if he has freely accepted, he has ex hypothesi chosen to receive it, and subjective devaluation is an argument whose premise is that where something has not been chosen by its recipient it cannot normally be said to have been of value to him.”   In this sense FA is said to have a limiting or negative function which aims not to prove that the defendant did positively value the benefit but, rather, to avoid the defendant from subjectively devaluing it.

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Birks argued that FA is unique in showing that there is an enrichment and that it is unjust.   As what may constitute an “unjust factor”, it fits in with factors negativing voluntariness, such as mistake, duress and failure of consideration.   But unlike them, FA focuses on the defendant’s conduct and state of mind, not the claimant’s.   In other words, it is deemed to be a defendant-oriented ground of restitution. According to Birks, where the defendant has freely accepted “he has only himself to blame for the resulting situation”. This particular characteristic hence allows disappointed risk-taker, who conferred benefit on a free acceptor, to bring a restitutionary claim ...

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