Two of the most publicly salient litigation patterns of recent years – the claims of victims of slavery against corporations that benefitted from their slave labor, and the suits of governments against injurious industries for the prevention and amelioration costs they incurred in dealing with harms which were arguably caused to their citizens by the defendant industries – share one common denominator. Both invoke restitution, loosely defined in this book as the body of law dealing with benefit-based liability or benefit-based recovery.

This book discusses the American law of restitution in an attempt to expose and examine critically some of its underlying normative commitments. Writing a book on restitution in a US environment is a risky (but hopeful) enterprise. To be sure, “Americans led the way in the development of the modern law” of restitution and the “sense that they were at the frontier of the law of restitution endured into the 1950s and 1960s.” In those days restitution was a hot topic in the American law school environment: a standard part of the upper-year curriculum, and a matter of considerable academic interest. But this is no longer the case. Only a bare handful of American law schools offer a restitution course these days, and few academics write in this area. Restitution was subsumed under the general category of remedies or dissipated into the interstices of property, torts, and contract. As a consequence, many American lawyers and judges are unfamiliar with the law of restitution.

Shifting gear from good samaritans to restitution claimants who conferred a benefit in the pursuit of their own self-interest raises a theoretical puzzle. On the face of it, these claimants – think, for example, of a class action member who pays her lawyer's fee, a mortgagee who pays its mortgagor's taxes in order to prevent foreclosure, or one of several tortfeasors who settles with the victim – can raise none of the reasons for restitution used in either chapter 3 or chapter 4. Their will has not been vitiated; on the contrary, they typically act with some deliberation and intent. They are not (necessarily) do-gooders: in fact, as the title of this chapter indicates, their claim is characterized as deriving from actions that are aimed at being self-serving. And while they can generally show that they have conferred a benefit on the defendant, the defendant can typically invoke the strongest defense – according to both law and theory – of restitution defendants in the good samaritan setting: in some cases she actively indicated her unwillingness to pay for the benefit; in many others, she could at least have been asked (no emergency made communication impracticable). Why should such restitution claimants ever be allowed – even encouraged – to “officiously meddle” (as the common epithet goes) in the defendant's affairs? And why is it that such self-interested claimants actually fare relatively well in the common law of restitution (at least as compared to their other-regarding counterparts)?

The theme of this chapter is that restitution claims that arise in a contractual context should respect the contractual allocation of risks and benefits. Whether we think of such claims as based on the contract, or insist that they have an independent doctrinal source grounded in unjust enrichment, their analysis should not ignore the contractual setting in which these claims are situated. This prescription requires close attention to the facts of the case at hand that may point to certain explicit or implicit consensual allocations of risks and benefits. It also entails an inquiry into the best allocation of risks and benefits between contractual parties that law should prescribe absent a specific consensual opt out. Either way, an enrichment-based claim that is not attentive enough to the implications of the contractual background is likely at best to obscure the pertinent questions, and at worst to lead the doctrine astray.

The proposition that awards of restitution should be attentive to any contractual background is widely accepted in American law. There is less agreement as to the implications of this proposition, partly because of disagreements as to which values should guide law in prescribing contractual default rules. Most of the attention (and the disagreements) of courts and commentators focuses around three categories of restitution cases that involve a contractual context.

The preceding chapters, as well as the ones to follow, correspond by and large to the accepted categories of the law of restitution. This chapter is different. It covers an amalgam of restitutionary rules, claiming that together they have a coherent and normatively appealing theme that goes unobserved by the existing literature.

The structure of the chapter follows this goal. Sections A–C discuss the three doctrines I seek to integrate: unjust enrichment between cohabitants, restitution for the supply of necessaries, and rescission of gifts due to undue influence. These three doctrines do not easily fit into the familiar categories of restitution. The conferrals of benefits addressed by these seemingly unrelated doctrines can be properly characterized neither as sheer pursuit of self-interest (like the cases discussed in chapter 5) nor as acts of good-samaritanism (like the cases analyzed in chapter 4). As we will see throughout sections A–C, they are better characterized as different aspects of the legal facilitation of relationships of long-term reciprocity.

More precisely, this chapter shows how the law of restitution supports the liberal vision of community. By community I refer to “any group of people who share a range of values, a way of life, identify with the group and its practices and recognize each other as members of that group.” In identifying themselves with a community, individuals commit themselves to it: they endorse and promote its projects and regard their own well-being as intimately linked to its flourishing.

“A person who is unjustly enriched at the expense of another is liable in restitution to the other.” These are the words of the first section of a partial draft of a new (and exciting) Restatement (Third) of Restitution and Unjust Enrichment. These words repeat almost verbatim the language of the first section of the first Restatement, published in 1937, so that the “central achievement”of the old Restatement – the “identification of unjust enrichment as an independent basis of substantive liability” – will be carried forward. Along these lines, the new Restatement further prescribes that “[t]he source of a liability in restitution is the receipt of an economic benefit under circumstances such that its retention without payment would result in the unjust enrichment of the defendant at the expense of the plaintiff.”

Since the very inception of restitution as a field with the publication (in the United States!) of William Keener's treatise on quasi-contracts in 1893, the role of the principle of preventing unjust enrichment in the law of restitution has been and still is a matter of some intense debate. But Keener's position – placing the principle against unjust enrichment as the normative foundation of the law of restitution – is by now the orthodoxy. The new Restatement reflects modern-day American restitution law, which is dominated by the language of preventing unjust enrichment.

While restitution receded from the American academic landscape and was marginalized in the law school curriculum, courts continued to develop the doctrine, facing new problems and refining the rules dealing with benefit-based civil liability. In fact, some of the most high-profile cases of recent years (and the years to come) are cases of restitution: multi-million dollar mistaken wire transfers, subrogation claims of various governmental bodies against an increasing number of injurious industries, and the unjust enrichment claims of slave laborers (or their descendants) against corporate defendants that captured ill-gotten gains from their enslavements are only a few of the most salient examples.

The law of restitution should be revived in the American legal academia not because it will otherwise disappear. Benefit-based claims are not likely to go away as long as they play a role in real-life problems such as the allocation of risks and responsibilities for mistakes, the solution of systematic collective action problems, the facilitation of relationships of informal intimacy and of good samaritan behavior, and the vindication of people's (various types of) rights against potential infringers. Sophisticated lawyers are likely to keep on pressing restitutionary claims in these as well as other cases, such as contract disputes and insolvencies, in an attempt to serve their clients’ best interests.

Mistakes are ubiquitous. On numerous everyday occasions, we are mistaken about facts or law. Many of these mistakes are inconsequential or self-regarding, with no detrimental effect on anyone but the mistaken party. Such mistakes require no legal intervention. Law is invoked, however, when more than one person is involved in the drama.

One such case, outside the scope of this chapter (and of the law of restitution), is mistake in the formation of a contract. A similar type of mistake, also somewhat beside my inquiry here, involves mistakes in dispute settlements. The pertinent rule for such mistakes has been laid down by the first Restatement of Restitution, and is still – as it should be – good law: “A person is not entitled to rescind a transaction with another if, by way of compromise or otherwise, he agreed with the other to assume, or intended to assume, the risk of a mistake for which otherwise he would be entitled to rescission and consequent restitution.” As the draft of the new Restatement explains, if money is paid “in the face of a recognized uncertainty as to the existence or extent of the payor's obligation to the recipient,” it “may not be recovered on the ground of ‘mistake,’ merely because the payment is subsequently revealed to have exceeded the true amount of the underlying obligation.”

The celebrated case of Olwell v. Nye & Nissen has become one of the legends of the law of restitution. Olwell sold his interest in an egg-packing corporation to Nye & Nissen. By the terms of the sale, he was to retain full ownership in an egg-washing machine formerly used by that corporation. Olwell stored the machine in a space adjacent to the premises occupied by Nye & Nissen. Nye & Nissen, without Olwell's knowledge or consent, took the egg-washer out of storage and used it for the next three years in the regular course of its business. Olwell was not materially damaged, since the egg-washing machine was not harmed by Nye & Nissen's operation during that period, and Olwell never claimed title to it. Hence, Olwell sued Nye & Nissen in quasi-contract, waiving his conversion suit. He sought to recover the profits that inured to Nye & Nissen as a result of its wrongful use of the machine. The Supreme Court of Washington held that, though no material harm had been done, Nye & Nissen was nonetheless liable for the benefit it had captured. More precisely, given the scarcity of labor immediately after the outbreak of World War II, the Court ordered Nye & Nissen to pay Olwell its ill-gotten gain measured by the amount saved in labor costs by using his machine.

Olwell is an exciting case because it vividly demonstrates the potential bite of restitutionary claims in cases of wrongful enrichments.

Most of this book is dedicated to showing that the normative underpinnings of various restitutionary doctrines can, and should, inform the future evolution of the law. It is my hope that by now the reader shares (or at least appreciates) the potential of this optimistic posture, which was presented in chapter 1 and applied thereafter. This chapter, which focuses on the last paradigm case of restitution, shows the limits of such an enterprise.

Traditional doctrine grants restitution claimants in bankruptcy – creditors who can identify their property (or trace its proceeds) in the debtor's estate, and show that it was obtained as a consequence of a voidable transfer (in the typical case: of the debtor's fraud) – a valuable trump. If this restitution claimant succeeds in asserting that such an identifiable asset is subject to a constructive trust in her favor, she can simply reclaim what is deemed to be equitably hers. Thus, this fortunate claimant gets, in effect, a priority, escaping the destiny of other unsecured creditors whose claims are only partly satisfied.

This important role of restitution in bankruptcy has recently become a subject of fierce debate among courts and commentators alike. Critics insist that because constructive trust is a remedy, imputing restitution claimants with equitable ownership is but a fiction, and a rather awkward one, given the wonderful intricacies of transactional tracing.

Analogies with the position of rescuers, and developments in the law relating to recovery of purely economic loss, suggest that the carer might hope to have a cause of action in tort against the wrongdoer. There are in fact some cases in which the carer has pursued her own claim. However, this chapter will conclude that they are unreliable and confirm the assumption made in Hunt v. Severs that the carer in general has no such action:

A possible claim in negligence?

The carer's action can only lie in negligence. There is no purpose in pursuing the limited potential of the old cause of action called actio per quod consortium et servitium amisit which is occasionally mentioned in this context. In most jurisdictions it has been abolished and it is of limited utility to this analysis.

The loss experienced by the carer is purely economic loss, in the sense that it does not flow from injury to the carer or to her property. For example, the carer frequently forgoes income and incurs expenses, such as travelling costs, when intervening to assist the victim.

This chapter is concerned with the novel policy motivated unjust factor called the policy against accumulation. The unjust enrichment framework adopted in this book separates the unjust factors into two categories. The first category establishes injustice on the ground that the claimant's intention to benefit the defendant is in some way deficient or qualified. The second comprises the so-called policy motivated unjust factors, according to which the law recognises particular grounds of claim in order to promote policy objectives. The policy against accumulation falls into the latter category, and is relevant where a claimant receives a benefit, or has the right to recover a debt or damages from another party, and receives, or has the right to receive, in respect of the same debt or damage from a third party. The claimant may not be permitted to receive value from both parties. If she does, she must reverse one transfer, thereby preventing her accumulation in respect of the same debt or damage. The claimant's obligation to return value is given to reverse the unjust enrichment which would otherwise remain.

The question to be answered by this book is to explain the juridical basis of the carer's right to share in the fund of damages recovered by the victim. The insurance subrogation analogy set out in chapter 7 shows us that the indemnity insurer's right to share in the insured's damages also requires explanation. It seems tolerably clear that both are rights raised to reverse unjust enrichment.