Stephen Smith, ‘A Duty to Make Restitution?’

The rules governing impaired transfers are widely thought to lie at the core of unjust enrichment law. This essay defends two propositions about these rules. First, there is no duty, in the common law, to make restitution of benefits obtained as the result of an impaired transfer (for example, a transfer made by mistake or as a result of fraud or compulsion). Rather than imposing duties to make restitution, or indeed duties of any kind, the rules governing impaired transfers impose only liabilities, in particular liabilities to judicial rulings. The only legal consequence of a mistaken payment is that the recipient is liable to be judicially ordered to repay a sum of money equal to the payment. Second, it matters that the law governing impaired transfers imposes only liabilities, and not duties, because, inter alia, explaining and justifying liabilities is different from explaining and justifying duties. In particular, certain well-known objections to attempts to explain impaired transfer law can be avoided once it is recognized that this law is concerned exclusively with liabilities. In summary, this essay argues that the distinction between duty-imposing and liability-imposing rules has important implications for understanding the foundations of the law governing impaired transfers.

Smith, Stephen A, A Duty to Make Restitution? (November 12, 2012). (2013) 26 Canadian Journal of Law and Jurisprudence 157-179.

First posted 2015-11-16 06:54:50

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