Unjustified Enrichment: Key Issues in Comparative Part 5 doc

P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-09 October 12, 2001 10:20 Char Count= 0 unwinding mutual contracts 277 of ‘received enrichment’ and not ‘surviving enrichment’. Once the defence of change of position is recognised, this explanation of model III will no longer do. (j) The loss lies where it falls Some apply the maxim ‘the loss lies where it falls’ and argue that in the current example the loss fell on A and he should not be able to shift it on to B without good reason. But the argument is flawed. Under model II loss of the horse falls on B. It will lie there unless B has a good reason to shift it on to A. With model III the loss of the horse falls on A. It will lie on A unless there is some justification for shifting it on to B. These two models start from opposite ends. The maxim ‘the loss lies where it falls’ is of no argumentative value when deciding whether to follow model II or model III. (k) He who seeks equity must do equity In English and Scots law, this principle is mentioned as being at the root of model III. 98 It seems to mean that a person seeking to unwind a contract should himself be in a position to give back what he received. The reference to equity is helpful as long as both the horse and the cow are in existence. However, equity is not of much help once the horse has ceased to exist. (l) Summary In England, Scotland and Germany, but also in America and among Romanists, there are a number of arguments that seem to suggest that model III is preferable. But none of these arguments were compelling enough to justify the conclusion that model III is the right choice for unwinding mutual contracts. 2. Are there internal arguments for a particular model? The question I am concerned to answer in this subsection is whether or not any of these models achieve equitable results and provide the tools to deal with different possible fact patterns. (a) Model I I will not spend any time on total failure of consideration. It is now accepted in English law that total failure of consideration should be 98 Aguilar v. Aguilar (1820) 5 Madd 414 at 416 n. 1; Scotland North British and Mercantile Insurance Co. v. Stewart (1871) 9 M 534 at 537. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-09 October 12, 2001 10:20 Char Count= 0 278 phillip hellwege interpreted in such a way that all that is needed is counter-restitution. The case law is starting to follow the lead of legal academics. Model I is slowly being replaced by model III. 99 (b) Model II Model II is that of the Zweikondiktionentheorie. A can claim back the cow. It does not affect A’s claim against B that he himself is not able to give back the horse. B cannot claim anything from A, since A can rely on the defence of change of position: he has lost the horse. Thus, the risk of loss of the horse is usually on B. If that were the end of the story, the results would be in many, though not in all, cases unjust. However, German law offers a number of tools whereby B can shift the loss on to A. (i) If A rescinds the contract for mistake, he has to make good B’s reliance damage: § 122 I BGB. In reliance on the validity of the contract, B has transferred the horse to A. A has to make good B’s reliance damage either by transferring back the horse or by making good its value. It is no defence to the claim for damages that A has lost the horse. (ii) If the contract is void for impossibility ( § 306 BGB) and one party knew or ought to have known that, then the other party can claim back his or her reliance expenditures ( § 307 BGB). Thus, if A was to give two cows in exchange for B’s horse and A has so far transferred only one, while the other was already dead when the contract was formed, then the contract is void. A can claim back the one cow that he has already delivered to B for impossibility. It does not affect his claim that he cannot offer the horse back. However, if he knew or ought to have known that the cow was dead, he is liable to make good B’s reliance damage. (iii) If the contract is void for illegality ( § 134 BGB) and A knew or ought to have known of the illegality, B can claim his reliance damages from A( §§ 309, 307 BGB). (iv) Similar results may be achieved with culpa in contrahendo, with § 826 BGB, and with §§ 823 II BGB, 263 StGB. Therefore, although in principle the risk of loss of the horse is on B, B can shift it on to A in all cases in which A is either responsible for the unwinding factor or in which he knew or ought to have known of the unwinding factor before B transferred the horse to A. (v) Furthermore, B can always shift the loss on to A where A knew or ought to have known that he was not entitled to the horse and was at fault in dealing with the horse in such a way that it ceased to exist: §§ 989, 990 BGB; §§ 989, 292, 818 IV, 819 I BGB; §§ 989, 347, first sentence, BGB. 99 See the references in n. 36, above. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-09 October 12, 2001 10:20 Char Count= 0 unwinding mutual contracts 279 The results achieved with model II are therefore acceptable, but only if backed up by legal tools with which B can shift the loss on to A. German law offers these tools, as shown. English law does not have comparable actions to claim reliance damage, such as on grounds of culpa in contrahendo. For this reason, model II is not open to English law. 100 (c) Model III As already seen, model III may be achieved by a number of means, of which counter-restitution, restitutio in integrum and the Saldotheorie are the most important. All of these aim to unwind the contract in toto. A’s claim against B and B’s claim against A are not looked upon as distinct, but as just two steps in the same story: unwinding the proprietary and factual consequences of the contract. The conclusion which model III draws from this is that A is within his rights to have the contract unwound only if he offers counter-restitution to B either in specie or in value. As a consequence, the risk of the loss of the horse is on A not on B. There are, however, exceptions to this rule: (i) If to allow A to unwind the contract only on offering counter-restitution would subvert the policy consideration that renders the contract void, then A need not make counter-restitution. 101 (ii) If loss of the horse is attributable to B, A is again able to claim back the cow without making counter-restitution. The most important case is where A wants to have the contract unwound because the horse is defective, but the horse ceased to exist owing to this same defect. 102 (iii) Furthermore, the Saldotheorie does not apply where B has fraudulently induced A to enter into the contract. 103 English and Scots law do not know this exception. A even has to offer restitutio in integrum to B if he wants to rescind the contract for fraudulent misrepresentation. 104 The results achieved by model III are acceptable. 100 Model II might be open to Australian law which has claims for reliance damages comparable to those of German law: Waltons Stores (Interstate) Ltd v. Maher (1988) 164 CLR 387; Commonwealth of Australia v. Verwayen (1990) 170 CLR 394; Justine Munro, ‘The New Law of Estoppel’, (1993) 23 Victoria University of Wellington Law Review 271; Michael Spence, ‘Australian Estoppel and the Protection of Reliance’, (1997) 11 Journal of Contract Law 203; Michael Spence, Protecting Reliance: The Emergent Doctrine of Equitable Estoppel (1999). 101 See, e.g., Guinness plc v. Saunders [1990] 2 AC 663; Erskine, Institute, Book I, Title VII, 41. 102 Kinnear v. Brodie (1901) 3 F 540; Head v. Tattersall (1871) LR 7 Ex 7; RGZ 94, 253. 103 BGHZ 53, 144. See Dernburg, Pandekten, § 143.5; Vering, Geschichte und Pandekten, § 134 VII; von Wening-Ingenheim, Lehrbuch, Book VI, § 11. 104 For example Spence v. Crawford 1939 SC (HL) 52. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-09 October 12, 2001 10:20 Char Count= 0 280 phillip hellwege (d) Model IV Under model IV the loss is split between the parties. This is the most flexible approach. It can take into account the special circumstances of each case. Prima facie it is the most attractive model. However, there are a number of problems with it. (i) First, there needs to be a catalogue of factors that can be taken into consideration when apportioning the loss. Some might tend to argue that this should be left to the judge. 105 He will best be able to work out which factors should influence the loss apportionment in a given case. However, one should be able to agree on a catalogue of factors which should and those which should never influence the result of a given case. If this cannot be done in principle, how is the judge expected to do so? In German, Scots and English legal literature as well as in the case law a number of factors have been suggested: responsibility for the unwinding factor; responsibility for the loss; policy considerations of the unwinding factor; which party can better bear the loss; for whose benefit the contract was made. 106 (ii) It is not enough just to enumerate the different factors. One has to decide how these factors come into play. 107 The law faces a similar problem with contributory negligence: if the loss of the plaintiff has been caused not only by the defendant but also by his own negligence, his claim for damages may be reduced. 108 In the case of contributory negligence both the acts of the plaintiff and the acts of the defendant have caused the loss. However, the problem here is slightly more complicated. If B induced A to enter into the contract by fraudulent misrepresentation and A killed the horse, then A is responsible for the loss of the horse; B is responsible for the unwinding factor. Each is responsible for a different fact. How should these two responsibilities be weighed against one another? If B had not fraudulently induced A to enter into the contract, A would never have received the horse, and would never have been in a position to kill it. Should the loss therefore be on B? One possible answer is that B’s misrepresentation only influences the loss apportionment, if the fact misrepresented to A caused the loss. 109 B fraudulently tells A that the horse is fit for work and in fact it is not. If A kills the horse, the loss will be on him. If the horse only dies because it was not fit for work, the loss will be on B. If A 105 Haggarty v. Scottish Transport and General Workers Union 1955 SC 109 at 114–15 per Lord Sorn; Gamerco SA v. ICM/Fair Warning Ltd [1995] 1 WLR 1226 at 1236–7 per Garland J; Axel Flessner, Wegfall der Bereicherung. Rechtsvergleichung und Kritik (1970), 156 ff.; Edgar Deplewski, Die Risikoverteilung im nichtigen Synallagma (1976), 164 ff. 106 Flessner, Wegfall, 115 ff.; Deplewski, Die Risikoverteilung,85ff. 107 Kohler, Die gest ¨ orte R ¨ uckabwicklung, 249; Rengier, ‘Wegfall der Bereicherung’, 428. 108 Law Reform (Contributory Negligence) Act 1945; § 254(1) BGB. 109 See Canaris, ‘Die Gegenleistungkondiktion’. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-09 October 12, 2001 10:20 Char Count= 0 unwinding mutual contracts 281 by using the horse breaches his diligentia quam in suis and the horse dies, but a horse which was fit for work would have been able to manage this situation, the loss may be split. It is therefore already difficult to explain how only two factors may influence the loss apportionment. (iii) It is not yet clear which loss is to be apportioned. Let me again modify the hypothetical case. B transferred his horse to A. The value of the horse at the time of performance was £400. The value of the cow that B was to get in exchange was £300. B has made a bad bargain. Before A performs his side of the bargain the horse declined in value. It is now worth only £200. Finally, the contract is frustrated and the frustrating event also kills the horse. Since neither party is responsible for the frustrating event and since neither party is responsible for the death of the horse, it can be assumed that the loss is best split equally between the parties. But is it the loss of £200, £300 or £400 which is to be split? In conclusion, model IV is unattractive for English and Scots law, because it is not at all clear how it functions. Leaving all these questions to the discretion of the judge would be capitulation to the problems of principle. 3. Summary In English and Scots law, the unwinding of mutual contracts should be further developed on the basis of model III. This should apply regardless of the unwinding factor, how the claim is categorised, and which method is adopted to unwind the contract. V. The meaning of restitutio in integrum Model III needs a name. For English and Scots law, counter-restitution or restitutio in integrum seem to be suitable candidates. I would suggest that restitutio in integrum is the most appropriate. 110 But what is meant by restitutio in integrum needs to be carefully defined. The term has been used at different times in Scottish and English legal history in different senses: (i) to denote an action; 111 (ii) to describe the plaintiff ’s aim in bringing the 110 Virgo, Principles, 32 ff. apparently prefers counter-restitution. 111 See the old cases of unwinding contracts for minority. See also Percival Gane’s ‘Translator’s note’, in: The Selective Voet: Being the Commentary on the Pandects by Johannes Voet (1989), IV, 1. This was also the pandectist sense of the term: see, e.g., Mackeldey, Lehrbuch, § 207.c.1; Puchta, Pandekten, § 100; Friedrich Carl von Savigny, System des heutigen R ¨ omischen Rechts (1848), vol. VII, 93–4, 98 ff.; Alois Brinz, Lehrbuch der Pandekten (2nd edn, 1873), § 115. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-09 October 12, 2001 10:20 Char Count= 0 282 phillip hellwege action (to be put in integrum); 112 (iii) to refer to a requirement of rescission (the defendant needs to be put in integrum); 113 (iv) as a synonym for ‘total restitution’ or that both parties have to be put into their status quo ante contractum. 114 This last sense is to be preferred because it describes the unwinding of a mutual contract in its totality: A asks for restitutio in integrum and in order to be successful has to offer restitutio in integrum. Restitutio in integrum means that someone is put back into his status quo ante. Is it ever possible that both parties are put back into their status quo ante ?Ifrestitutio in integrum or status quo ante is understood too literally, then this will rarely be so. First, if one party has incurred any expenditure in reliance on the contract, one of the two parties will have to bear this loss. This party will be worse off than he was before the contract so not returned exactly to his status quo.Butrestitutio in integrum has always disregarded reliance expenditure. Restitutio in integrum only means that both parties have to give back benefits received under the contract. Secondly, if one party has lost what he received, exact restitutio in integrum will be impossible. But the preferable view is that restitutio in integrum need not be exact. In the example used in this chapter it is sufficient that A makes good the value of the horse if he wants to claim back the cow. Literally, neither A nor B is put back into his status quo ante.Bonlygetsthe value of the horse and not the horse in specie. A is financially worse off. Thirdly, if the contract is terminated or frustrated, it will stay in force for some purposes; to that extent the parties are not put back into their status quo ante contractum. This must be disregarded as well. All that restitutio in integrum means is that both parties have to give back what they received under the contract either in specie or in value. VI. Restitutio in integrum v. the defence of change of position Having now determined how a mutual contract is unwound, I can properly discuss the question how the defence of change of position can be applied in this context. There are two questions: (i) is restitutio in integrum merely an application of the defence of change of position? (ii) are the two distinct? 112 See the Scottish cases on minority and, e.g., Burnes v. Pennell (1849) 2 HLC 497 at 515 per Lord Campbell. 113 See, e.g., Houldsworth v. City of Glasgow Bank (1879) 6 R 1164 at 1173 per Lord Deas. 114 See, e.g., Stuarts v. Whiteford and the Duke of Hamilton (1677) Mor 16489 at 16493; Boyd & Forrest v. Glasgow and South Western Railway Co. 1914 SC 472 at 496 per Lord Dundas; Graham v. Western Bank of Scotland (1864) 2 M 559 at 564 per Lord Ordinary Kinloch. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-09 October 12, 2001 10:20 Char Count= 0 unwinding mutual contracts 283 Can they be applied in the same case, or is the defence only applicable where restitutio in integrum does not apply? I have already observed that there are two possible applications of the defence in the example. First, B could rely on the defence of change of position. He could say to A: ‘In reliance on the contract I have given you my horse. I have thereby changed my position. Give it back, before you get your cow back.’ On the other hand, A could rely on the defence. He could argue: ‘I have received your horse, but now it has ceased to exist. I have therefore changed my position.’ It would be nonsensical to allow both parties to rely on the defence in this way. In each case only the fate of the horse is in question. If A and B are both allowed to rely on the defence, no policy decision has been taken as to who should bear the loss. If A is the plaintiff, the loss would be on him, because the defence is open to B. If B is the plaintiff, the loss would be on him, because the defence is open to A. 115 There would also be a cumulative risk on the plaintiff. 116 If A can claim that the contract should be unwound, the loss of the cow will be on him, because B can rely on the defence of change of position; equally the loss of the horse will be on him, because B can rely on the defence of change of position. 1. Should B be able to rely on the defence? B has given the horse to A. That could count as a change of position. The question is whether restitutio in integrum is nothing but this defence of change of position. For a number of reasons the answer has to be a clear ‘No’: (a) It is thought that the defence of position only applies to parties who change their position in the honest belief of their entitlement to the enrichment. Thus, if B were fraudulent, he would not be able to rely on the defence. But the case law is very clear that restitutio in integrum works in favour even of a party who is fraudulent. 117 (b) The problem of anticipatory reliance comes into play: B might have given his horse before he received the cow from A. B therefore relied not 115 Bremecker, Die Bereicherungsbeschr ¨ ankung, 69–70; Oertmann, ‘Bereicherungs- angspr ¨ uche’, 1065; Oertmann, ‘Noch einmal’, 335; Pawlowski, Rechtsgesch ¨ aftliche Folgen, 41–2; Schneider, ‘Zur Bestimmung’, 179–80. 116 Bremecker, Die Bereicherungsbeschr ¨ ankung, 66–7; Deplewski, Die Risikoverteilung, 13, 23; Kohler, Die gest ¨ orte R ¨ uckabwicklung, 168–9; Leser, Saldotheorie, 14–15. 117 Peter Birks, ‘Change of Position and Surviving Enrichment’, in: William Swadling (ed.), The Limits to Restitutionary Claims: A Comparative Analysis (1997), 36, 55 ff.; Peter Birks, ‘Change of Position: The Nature of the Defence and its Relationship to other Restitutionary Defences’, in: McInnes (ed.), Structure and Challenges, 49, 66; McKendrick, ‘Total Failure’, 239. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-09 October 12, 2001 10:20 Char Count= 0 284 phillip hellwege on his enrichment but on the expectation of A’s performance. The case law indicates that anticipatory reliance might not be sufficient for a successful defence of change of position. 118 However, for the application of restitutio in integrum it is totally irrelevant who performed first. 119 (c) In addition, the following arguments have been put forward in German legal literature. Take the following modification of the example: B has given the horse to A, but A has not yet transferred the cow to B. The defence of change of position fails in this situation because B never received an enrichment from which he could deduct his own performance. However, the principle of restitutio in integrum is capable of dealing with this case. A has to render restitutio in integrum if he wants to rescind the contract, not just if he wants to claim his cow back. (d) Finally, A does not have to offer restitutio in integrum to B if the horse ceases to exist due to B’s fault. This exception cannot be explained on the basis of the defence of change of position. 2. Should A be able to rely on the defence? Should A be able to rely on the defence in a claim by B? He has lost the horse. Again, the answer needs to be ‘No’. (a) With restitutio in integrum the parties either have to restore what they received in specie or they have to make up its value regardless of whether they are still enriched. Hence, with restitutio in integrum it is of no concern whether A changed his position or not. (b) Suppose that the contract in our example is void. The contract is fully performed. The loss of the horse is on A. He can only claim back the cow if he makes good the value of the horse. However, if only B has performed the contract, then the loss of the horse would be on B, if A were able to rely on the defence of change of position. Yet whether the contract has been fully performed or not should not influence the allocation of risk. It is most consistent with restitutio in integrum that in this case, too, A should make good the value. VII. Summary 1. In the unwinding of mutual contracts, our particular concern was with the question of what effect it should have on A’s claim against B that A is himself unable to give back what he received under the contract. In English, German and Scots law the answer to this question depends on a number of factors: (i) the unwinding factor; (ii) cate- gorisation of the unwinding factor; (iii) the method for unwinding 118 South Tyneside Metropolitan Borough Council v. Svenska International plc [1995] 1 All ER 545. 119 Burrows, Law of Restitution, 429. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-09 October 12, 2001 10:20 Char Count= 0 unwinding mutual contracts 285 the contract in toto; (iv) whether the contract as agreement, the proprietary consequences of the contract, or the factual consequences of the contract need to be unwound; and (v) the nature of the performance. It was argued that none of these factors should influence the answer to the problem. A unified approach needs to be found. 2. For English and Scots law, the most appropriate candidate for such an approach is restitutio in integrum. 3. Restitutio in integrum means that the party who seeks to unwind the contract needs to give back what he received under it. Offering restitutio in integrum is a requirement for each step of unwinding the contract. If one party at his choice can unwind the contract as agreement (as is the case with rescission), then restitutio in integrum is a requirement for rescission. If the contract is (for example) ipso iure void, then restitutio in integrum is a requirement for the claim to have the proprietary and factual consequences of the contract unwound. If the contract and the transfer of property are void, then restitutio in integrum is a requirement for claiming that the factual consequences of the contract should be unwound. 4. With restitutio in integrum the parties have to give back what they received in specie or by making good its value. Only in very exceptional cases will attention be paid to the fact that one party has lost what he received and that that party is no longer enriched. Only two such exceptions exist: where requiring a party to offer restitutio in integrum would subvert the policy underlying the unwinding factor; or where loss of what was received is attributable to the other party. The most prominent example of this second exception is where the object received ceased to exist owing to an inherent defect. 5. The defence of change of position and restitutio in integrum are two distinct legal institutes. Furthermore, the one is not compatible with the other. In the example used here, with restitutio in integrum the rule is that A has to give back the horse or its value regardless of whether or not he is still enriched. The risk is usually on A. With the defence of change of position one would have to start from the other end. It would be the rule that A had only to give back his surviving enrichment. The risk of the horse would be on B. Thus, restitutio in integrum and the defence of change of position exclude each other. Restitutio in integrum governs the unwinding of mutual contracts. Hence, the defence of change of position should not be applicable to unwinding mutual contracts. If it were allowed, there would be a risk of subverting the results achieved by restitutio in integrum. Furthermore, P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CU074-09 October 12, 2001 10:20 Char Count= 0 286 phillip hellwege the defence of change of position is limited to the law of unjustified enrichment. But not every step of unwinding a mutual contract is governed by the law of unjustified enrichment. In German law, unwinding a contract following a breach of contract is regulated by the law of contract. This would mean that in the process of unwinding a mutual contract the defence might sometimes be applicable and sometimes not. That would contradict the thesis of this chapter, that the process of unwinding mutual contracts should be governed by only one set of rules. It is therefore preferable to exclude the defence of change of position altogether. [...]... the overcharging in fact amounting to a criminal offence on his part The Court of Appeal held that there was no ground on which the plaintiff could recover his overpayment Denning LJ said: there is no allegation that the plaintiff was under any mistake of fact, nor is there any allegation that he was under a mistake of law; nor that he was 51 52 53 54 55 [19 05] 2 KB 123 at 133–4 (Collins MR), 136 (Mathew... ‘total’ is removed .50 45 46 50 It was not until 1998 that English law allowed recovery for mistake of law: Kleinwort Benson Ltd v Lincoln City Council [1999] 2 AC 349 [1960] AC 192 at 2 05 47 (1760) 2 Doug 696 48 At 290 49 [19 05] 2 KB 123 As Lord Goff of Chieveley recently did in Goss v Chilcott [1996] AC 788, at least in cases in which no computational difficulties were involved in valuing the benefits... The cause of action was instead one based on the plaintiff’s continuing property rights in the goods Ironically, this comes out most clearly in a passage in Mellish LJ’s judgment, where he says: I think the only question open upon this rule is, assuming that the plaintiff had never really intended to part with his goods to Alcock or to Bowers, whether he was precluded from recovering the goods from Bowers... situation in which the plaintiff somehow had to plead his own illegality as part of the evidential basis of his case If he could plead his case without mentioning the illegality, then even though that illegality might later be disclosed during the trial of the action, the plaintiff would still be given equitable relief In Tinsley v Milligan the plaintiff and the defendant bought a house with joint funds In. .. forfeit, something which, as Singh v Ali 25 demonstrates, could not have happened at common law In Tribe v Tribe a father owned 459 out of 50 0 shares in a family-run clothing company The father also held a lease of two shops, which the company occupied as licensee The shops were in a state of disrepair and, worried about his liability under the repairing covenants and that he might, in order to meet... implicit in the wording of one of the maxims used in this area If the rule is in pari delicto potior est conditio defendentis, then, in cases where the plaintiff does not share the defendant’s guilt, recovery ought to be allowed So, for example, in Hughes v Liverpool Victoria Legal Friendly Society, 35 the plaintiff was induced by a fraudulent misrepresentation to pay premiums on policies on lives in which... non-voluntary transfer Housing was in short supply in Uganda, with the result that landlords had the upper hand and tenants were vulnerable to exploitation And while the market is normally left to mediate in such situations, statute had recognised the transactional inequality by forbidding this particular type of bargain The law having decreed that the tenant was not capable of bargaining as an equal, restitution... 2001 1:42 Char Count= 0 w j swadling restricting personal liberty The merits of the plaintiff who pays a hit-man to murder a business rival are clearly different from one who pays a premium on an insurance policy in which he has no insurable interest A further difficulty is caused by the fact that in many cases the role contractual illegality is playing is ambiguous Though in some it clearly provides a... bar claims in respect 5 6 7 Though this is something which the word ‘restitution’ tends to disguise: see P Birks, ‘Misnomer’, in: W R Cornish et al (eds.), Restitution: Past, Present and Future (Oxford, 1998) [1 951 ] 1 All ER 92 Those seeking an answer to this question should consult P Birks, ‘Recovering Value Transferred Under an Illegal Contract’, (2000) 1 Theoretical Inquiries in Law 155 P1: FCH/FYX... there are said to be two classes of case in which, were the illegality to be removed, the claim would fail Thus, the argument goes, the illegality is operating as an ingredient of a cause of action The 56 Ibid at 1 95 57 [19 65] 1 WLR 53 7 58 Ibid at 53 9 P1: FCH/FYX P2: FCH CU074-Johnston CHAPTER-10 October 12, 2001 1:42 Char Count= 0 the role of illegality 3 05 two classes of case are the ‘protected . unwinding factor; (ii) cate- gorisation of the unwinding factor; (iii) the method for unwinding 118 South Tyneside Metropolitan Borough Council v. Svenska International plc [19 95] 1 All ER 54 5. 119 Burrows,. restitutio in integrum. Restitutio in integrum means that someone is put back into his status quo ante. Is it ever possible that both parties are put back into their status quo ante ?Ifrestitutio in integrum. Restitutio in integrum means that the party who seeks to unwind the contract needs to give back what he received under it. Offering restitutio in integrum is a requirement for each step of unwinding

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