Recent scholarship in the study of unjust enrichment has been informed by the need to create and maintain a taxonomy which accurately reflects our system of legal rights and obligations. One way of doing so is via an event based system (Birks, R, “Equity in the Modem World: An Exercise in Taxonomy” (1996) 26 UWALR 1). This system classifies legal events according to one of a generic list comprising: (1) consent; (2) unjust enrichment; (3) wrongdoing; and (4) other events. There may be more. The point is that rights and obligations may be seen as categories of response and are classified according to the events which generate them. An important aspect of this task is the need to understand the relationship between the various categories. The fundamental purpose of Skelton’s study is better to understand the relationship between restitution and contract. In this respect his book makes an important contribution to the debate in this field.

Restitution and contract overlap in many places. We know that in certain circumstances, following discharge for breach, restitution may be given to remedy a claim in subtractive unjust enrichment on the ground of failure of consideration. Recent authority has also suggested that breach of contract may constitute a wrong for which a restitutionary disgorgement remedy may be available (A-G v. Blake [1998] Ch. 439). Skelton is concerned with only one aspect of the relationship between restitution and contract. Specifically, he asks whether the terms of an ineffective contract have any relevance to the level of restitutionary recovery in an unjust enrichment claim brought in respect of benefits conferred during the performance of that contract.

Skelton’s analysis assumes that a contract has been rendered ineffective: for example, it might be discharged for breach or frustration, or it might be or have become void or unenforceable. In these circumstances, one party may have an action against the other in unjust enrichment to recover the value of money or non-money benefits conferred during the performance of the contract. One or other of the parties to the contract may attempt to rely on the contract terms relating to price. This raises the theoretical problem which is the subject of Skelton’s study. What relevance, if any, should the terms of the ineffective contract have to the level of restitutionary recovery? Although the question is initially cast in these general terms, the substance of Skelton’s book is concerned with this problem only as it relates to contract price.

The analysis identifies two main versions of the contract ceiling argument. The first version, which applies both to money and non-money benefits, invokes a contract ceiling in order to avoid any competition which might exist between the measures of recovery offered by a claim in contract and unjust enrichment. In this version the plaintiff is restricted to the sum which he would have obtained had his claim been in contract. The second version of the contract ceiling argument applies only to non-money benefits and comprises two sub-versions. The first sub-version is that which refers to a pro-rata contract price. It suggests that the measure of the plaintiff’s recovery should be the proportion of the contract price that the work done bears to the whole work required by the contract. The second sub-version is that the restitutionary award ought to reflect the market rate subject to the limit that the plaintiff should never recover more than the contract price.

Skelton notes that “[t]he cause of action in unjust enrichment is distinct from, and need not bow down to, contract” (at p. 101, citing Burrows, The Law of Restitution, London, 1993, 266 and 269) and that in principle, therefore, there is no basis for limiting the restitutionary award by reference to either version of the contract ceiling argument. However, he notes that the application of the bargained-for test of enrichment may in practice operate as a limit. He summarizes (at pp. 3 and 100-103) his thesis as follows: