P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-07 January 16, 2002 16:5 Char Count= 0 fraud, duress and unjustified enrichment 197 any other artifice’. 11 As far as South African law is concerned, the meaning of ‘fraud’ has long been uncertain, due to a strange convergence of civil- and common-law influences. At first it was equated with the very broad civilian concept of dolus malus, which covered all sorts of cases involving intentional deception, cheating or circumvention. 12 However, under the influence of the common law, ‘fraud’ later came to be interpreted more restrictively, along lines very similar to that of the English law as set out above. Thus, in all these systems, fraud, or its equivalent, at least consists in knowingly or intentionally making a false representation. Although it could still cover gross negligence under common law, it is clear that it certainly does not cover mere negligent or innocent misrepresentation. It is as a descriptor of the basic ‘fact pattern’ of particularly serious types of misrepresentation that the concept of ‘fraud’ will be used here. 13 The differences in where the cut-off point lies can for present purposes be regarded as of secondary importance. 14 However, a difference which is especially important in the context of the law of unjustified enrichment is the way in which these different systems perceive the relationship between fraud and certain other improper ways of obtaining consent. In English contract-law texts, fraud is viewed as a species of misrepresentation, 15 and therefore as a specific means of induc- ing an error. It is also not traditionally grouped together with duress. This stands in contrast to the position in German and Dutch law, which reflect 11 Art. 3: 44(3) BW; also see A. S. Hartkamp, Mr. C Asser’s Handleiding tot de Beoefening van Het Nederlands Burgerlijk Recht – Verbintenissenrecht (1997), vol. II, nn. 199–204, where it is indicated that the expression ‘through any other artifice’ (door een andere kunstgreep) should be interpreted restrictively. Bedrog essentially requires an intention to deceive. 12 See Lubbe, ‘Voidable Contracts’, 265 referring to the definition of dolus malus in Ulp. D. 4, 3, 1, 2. 13 See generally Zweigert and K ¨ otz, Introduction, 425 ff. In some systems, ‘specially deceptive practices’ are required, but as Zweigert and K ¨ otz point out, ‘[e]ven so, it is admitted on all hands that a simple lie can constitute deceit’ (ibid., 425). 14 In the English common law and in South African law, these differences were particularly important in determining whether a claim for damages would be available: traditionally, such a claim could only succeed in those cases of misrepresentation which amounted to fraud; rescission, on the other hand, could be obtained even in the event of innocent misrepresetation; see Lubbe, ‘Voidable Contracts’, 270 ff. 15 See generally Treitel, Law of Contract, 317 ff.; Anthony Guest (ed.), Chitty on Contracts (28th edn, 1999), vol. I §§ 6-001 ff., 6-045. The law of misrepresentation covers all cases of error induced by misrepresentation. In fact, it has been said that the term ‘mistake’ could be used to refer only to those cases of error not caused by misrepresentation; see Zweigert and K ¨ otz, Introduction, 421. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-07 January 16, 2002 16:5 Char Count= 0 198 jacques du plessis the traditional civilian preference for linking these notions. 16 There, in- nocent and negligent misrepresentation are generally dealt with in the context of the law relating to error, whereas the more serious cases of fraudulent representation (the terrain of the law of arglistige T ¨ auschung and bedrog) are grouped with duress. 17 But why view fraud in this light? If it in any event causes an error, and if error is a ground for relief, why not simply deal with it as a special case of error? Apart from obvious historical considerations, it would seem that the answer lies in the fea- ture of fraud identified earlier, namely that the means used to induce error in these cases are so seriously improper that the normal rules ap- plying to the restitution of transfers made in error are inappropriate. It is recognised that the victim deserves special protection. This could be provided, for example, by not requiring that his error be material or fun- damental. In other words, he could be allowed to escape from liability even though the fraud simply caused an error in motive. 18 It also means that he should be provided with a fuller spectrum of remedies, and that he should be able to recover more than the person who merely acted un- der an innocent or negligent misrepresentation. But these are issues more relevant to the effect of fraud than its content, and will be returned to later on. 2. Duress or unlawful threats The (originally Norman French) term ‘duress’ is derived from the common law. Traditionally, it only covered the situation where a person was un- lawfully subjected to actual or threatened personal physical harm. 19 This means that in some other cases where a person was subjected to pressure, relief had to be provided on different grounds – usually ‘undue influence’ in equity. 20 However, the scope of duress has broadened over the years so as also to accommodate harm to economic interests, and nowadays the difference between the two concepts is rather indistinct. German and Dutch law, on the other hand, have avoided these problems. Although a 16 On the historical background to the law of dolus and metus see Zimmermann, Law of Obligations, 664 ff. 17 On the relationship between error and misrepresentation in English law, as opposed to German and Dutch law, see Michael H. Whincup, Contract Law and Practice: The English System and Continental Comparisons (3rd edn, 1996), §§ 11.49, 11.56 ff. 18 Zweigert and K ¨ otz, Introduction, 425; Englard, ‘Restitution of Benefits’, § 5-81. See further Larenz, Allgemeiner Teil, § 20; Hartkamp, Mr. C Asser’s Handleiding, n. 199. 19 See Beatson, Anson’s Law of Contract, 271–2; Treitel, Law of Contract, 375; Skeate v. Beale (1841) 11 A & E 983; Cumming v. Ince (1847) 11 QB 112 at 120; Biffen v. Bignell (1862) 7 H & N 877. 20 See Treitel, Law of Contract, 375, 378; Zweigert and K ¨ otz, Introduction, 428. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-07 January 16, 2002 16:5 Char Count= 0 fraud, duress and unjustified enrichment 199 traditionally narrow conception of metus required that at times additional relief had to be provided on different grounds, 21 it is recognised nowadays that duress covers all cases where a person is unlawfully subjected to ac- tual or threatened harm. 22 Because the fear has to emanate from the per- son who made the threat, there can be no duress if the pressure is (merely) the consequence of some situation of need or distress. 23 No distinction is drawn between forms of duress according to the nature of the interests (for example, physical or economic) harmed. 24 The key question is simply whether the threat is unlawful. South African law again bears the im- print of both civil- and common-law influences: it received the civil law of metus (translated as ‘duress’), which was flexible enough to accommodate a broad range of threats of harm, but under the influence of the common law it somehow adopted a restrictive approach to providing relief in what could be termed cases of ‘economic duress’. It further felt the need to supplement the law of metus with the common law of undue influence. Curiously though, the justification for this development was not sought in the civil law of metus (and especially ‘reverential fear’ or metus reverentialis). In fact, it was with reference to the idea that in civil law restitutio in inte- grum would be provided in cases of dolus (interpreted in the broad sense indicated above) that the reception of undue influence from the common law was facilitated. 25 As in the case of ‘fraud’, it is not necessary to analyse the meaning of ‘duress’ in great detail. However, one important observation needs to be made. It deals with the much-disputed basis for providing relief. 26 Is the victim protected because his mental ability to make a decision is affected by the duress, or is it because of some other ground, such as an unlawful limitation of the freedom of choice through subjecting a person to threats of harm? Civilians as early as Paulus have held that the basis for relief is not a defect in mental ability: what is willed under compulsion, none 21 Most notably the law of the condictiones (see Jacques E. du Plessis, Compulsion and Restitution (unpublished Ph.D. thesis, University of Aberdeen, 1998), 16 ff., 40 ff., 60 ff., 121 ff., 134 ff.; John P. Dawson, ‘Economic Duress and the Fair Exchange in French and German Law’, (1937) 11 Tulane LR 345, 348. 22 See Zweigert and K ¨ otz, Introduction, 428. On Drohung in German law see Kramer in: M ¨ unchener Kommentar, § 123, n. 33; and in Dutch law art. 3:44(2) BW. 23 See Zweigert and K ¨ otz, Introduction, 428; Kramer in: M ¨ unchener Kommentar, § 123, n. 33. In cases of vis absoluta, where the person is being physically overpowered, he obviously does not act at all. See Zweigert and K ¨ otz, Introduction, 428; Kramer in: M ¨ unchener Kommentar, § 123, n. 32. 24 On the historical background see Zimmermann, Law of Obligations, 659. 25 See Lubbe, ‘Voidable Contracts’, 286 ff. 26 For a historical overview, see Gordley, ‘Contract in Pre-commercial Societies’, §§ 2–4 ff. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-07 January 16, 2002 16:5 Char Count= 0 200 jacques du plessis the less is willed (coactus volui, tamen volui). 27 The victim could be quite rational, and not even be afraid: his problem is that he cannot freely decide what he wants to do because the available choices have been restricted unlawfully. 28 The emphasis is then on the nature of the methods used to influence his will, and not on a deficiency in the will itself. In the common law, by contrast, it has been said that duress ‘overbears’ the victim’s will, 29 thereby influencing his mental ability to make a decision. However, some common lawyers have criticised this approach; after all, if all that has to be proven is an ‘overborne will’, even the victim of lawful pressure should be able to escape liability on grounds of duress. 30 From the overview above it should be apparent that fraud and duress deal with serious violations of individual autonomy. In the case of fraud, the victim’s freedom of choice cannot be exercised properly, because he was made to act on wrong information ‘conveyed’ in a particularly un- acceptable manner, while in the case of duress his freedom of choice is restricted by actual or threatened harm. It then stands to reason that these violations justify a strong measure of protection – stronger at least than the case where the actions are prompted by a spontaneous error or the sorts of pressures which are part of daily life. It will now be consid- ered how the law of restitution or unjustified enrichment can fulfil this function. III. The effect of fraud and duress In the course of the eighteenth century, German legal scholars devised the concepts of the ‘declaration of intent’ (Willenserkl ¨ arung) and the ‘legal trans- action’ (Rechtsgesch ¨ aft). 31 In essence, a declaration of intent is a declaration 27 Paul. D. 4, 2, 21, 5. See Zimmermann, Law of Obligations, 652 ff.; Du Plessis, Compulsion and Restitution,6ff. 28 See Du Plessis, Compulsion and Restitution, 161 ff. 29 See Pao On v. Lau Yiu Long [1980] AC 614. 30 See Lynch v. DPP. of Northern Ireland [1975] AC 695 B–C; Patrick S. Atiyah, ‘Economic Duress and the “Overborne Will”’, (1982) 98 LQR 197; Nicholas Seddon, ‘Compulsion in Commercial Dealings’, in: P. D. Finn, Essays on Restitution (1990), 138, 142 ff.; Beatson, Anson’s Law, 273 ff. 31 See Werner Flume, Allgemeiner Teil des B ¨ urgerlichen Rechts (3rd edn, 1979), vol. II, §§ 2, 4. Flume indicates that the Roman concepts such as actus and negotium could not fulfil such a function. The notions were never received in South African law, whose civilian roots lie in seventeenth- and eighteenth-century Roman-Dutch law. Modern introductory textbooks on South African law refer to concepts such as ‘legal act’ or ‘juristic act’ (regshandeling), but only as pedagogical tools; see, for example, H. R. Hahlo and E. Kahn, The South African Legal System and its Background (1968), 100 ff. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-07 January 16, 2002 16:5 Char Count= 0 fraud, duress and unjustified enrichment 201 indicating that certain legal consequences are intended 32 and it is essen- tial for the validity of many legal transactions, of which the contract is but one. 33 These concepts (which were unknown in Roman law, and which are still of scant relevance in modern South African law) have influenced other civil-law codes. Dutch law, for example, recognises similar concepts, most notably that of the ‘legal act’ (rechtshandeling). 34 These are acts that produce a legal effect or consequence because they were intended to do so. 35 This intention has to be manifested in a declaration. The important point for present purposes is that in these systems fraud and duress could affect the validity of all declarations of intent and legal transactions or acts, 36 by rendering them voidable. 37 This means that the person enti- tled to annul can decide whether to uphold the validity of the legal act. The effect of annulment is retrospective, so that the legal relationship of the parties is restored to the state in which it was before the act was performed. 38 But let us move from the general to the particular. Of all the types of declarations of intent or acts that can be influenced by fraud and duress, the present concern is with those relevant when determining liability based on unjustified enrichment. For present purposes, the most impor- tant of these are declarations or acts aimed at (1) creating contractual obligations, (2) achieving fulfilment or performance of all types of obliga- tions and (3) transferring ownership. As far as the difference between the 32 See, generally, Larenz, Allgemeiner Teil, § 19, and the authorities quoted there. 33 Cf. Zweigert and K ¨ otz, Introduction, 348 ff. 34 See A. R. Bloembergen, Rechtshandeling en Overeenkomst (1995), 2 ff. on the notion of a rechtshandeling and Flume, Allgemeiner Teil, §§ 2, 4 on the influence of the German Civil Code on Meijers’s draft of the New Dutch Civil Code, and also on its influence on the position in France, Italy and Greece. 35 See art. 3:33 BW and generally Hartkamp, Mr. C Asser’s Handleiding,n.2. 36 § 123(1) BGB. The reason why a declaration of will, and not only a juristic act, is affected is that the compilers of the BGB wanted to provide maximum protection to a person acting under duress (Benno Mugdan, ‘Denkschrift zum BGB’, in: Benno Mugdan (ed.), Die gesammten Materialien zum B ¨ urgerlichen Gesetzbuch f ¨ ur das deutsche Reich (1899), vol. I, 834). 37 See § 123(1) BGB; art. 3:44(1) BW; Arthur S. Hartkamp and Marianne M. M. Tillema, Contract Law in the Netherlands (1995), §§ 36, 99. On the historical background regarding the consequences of voidability as opposed to voidness, see Zimmermann, Law of Obligations, 660, 671 ff. It is only in certain cases of fraud that the error it causes is so material that the act should be regarded as void (see section II, 1, above, on the relationship between misrepresentation and error). In the case of absolute duress or vis absoluta (e.g. where a person’s hand is held and thus forced to make a signature) there obviously is no declaration of intent at all. This renders any act affected by it automatically void. 38 See § 142(1) BGB; art. 3:53 BW. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-07 January 16, 2002 16:5 Char Count= 0 202 jacques du plessis first two categories is concerned, attention is usually focused on the situ- ation where a contract is concluded and restitution is sought of what was performed thereunder. This is, of course, an important category of cases, but it should not be ignored that fraud and duress can also influence the conferring of a benefit outside a contractual context. For example, they may move a person to perform ex lege obligations, or even to engage in acts that do not involve performance at all, such as to make a bequest, declare a dividend or grant a licence. These cases do not concern the validity of a contract between the victim and the wrongdoer, but rather some other act whose validity is suspect. As far as the difference between the second and third categories is concerned, it is important from a civilian perspective to distinguish between the intention to fulfil an obligation (that, is to per- form), and the intention to transfer ownership. The position in practice normally would be that the person who intends to transfer ownership of something does so in order to fulfil an obligation, but this need not be the case – he might, for example, intend to make the transfer now with a view towards creating a loan agreement or donation in the future. A ques- tion that is of particular importance in this regard is the extent to which fraud or duress may prevent ownership from passing in the first place, and so entitle the owner to vindicatory relief, rather than relief based on unjustified enrichment. The last category therefore deals with the border- line between the laws of property and unjustified enrichment. But first consider the borderline between the laws of unjustified enrichment and contract. 1. The effect of fraud and duress on the validity of contracts (a) Rescission and restitutio in integrum In the civilian systems under review, the question whether fraud and duress affect the validity of a contract has not traditionally been the con- cern of the law of unjustified enrichment. From a historical perspective, this is perfectly understandable. In Roman times, the praetor did not try to counteract fraud or duress through developing the law of the condictiones. 39 He dealt with the problem head-on by exercising his extraordinary powers to order restitutio in integrum, thus ensuring that both parties were restored to their previous position, and by awarding an actio quod metus causa, which apparently was aimed at inducing the victim to make restitution through 39 A possible, and problematic, exception is the extorted stipulatio; see Pomp. D . 12, 5, 7; Du Plessis, Compulsion and Restitution,23ff. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-07 January 16, 2002 16:5 Char Count= 0 fraud, duress and unjustified enrichment 203 subjecting him to fourfold damages if he did not. 40 The fact that restor- ing parties in integrum generally took place in the context of rescission of contracts explains how in some systems restitutio in integrum came to be regarded as ‘contractual’ in nature, something tailor-made for cases of improperly obtained consent. This is still the position in modern South African law, which (mainly due to differences in the measure of recovery) expressly rejects the idea that a duty of restitution in cases of fraud or duress is based on unjustified enrichment. 41 However, other modern civilian systems view matters rather differently. Already at the end of the nineteenth century, the compilers of the German code regarded it as unnecessary to recognise a remedy styled restitutio in integrum. 42 Where a declaration of intent was rescinded on grounds of fraud or duress, any juristic act of which this declaration of intent formed part would be invalid. If such a juristic act was supposed to act as the le- gal ground or causa of a transfer, that legal ground would be regarded as never having existed. 43 It is only here that the law of unjustified enrich- ment would enter the scene. 44 By determining that the contract is invalid, the law regarding the validity of declarations of intent and legal transac- tions has already done the hard work of indicating that a performance is retained without legal ground. The law of unjustified enrichment only 40 See Berthold Kupisch, In integrum restitutio und vindicatio utilis bei Eigentums ¨ ubertragungen im klassischen r ¨ omischen Recht (1974); Zimmermann, Law of Obligations, 656 ff.; Du Plessis, Compulsion and Restitution,13ff. 41 For an exposition of these views and criticism, see D. P. Visser, ‘Rethinking Unjustified Enrichment: A Perspective of the Competition between Contractual and Enrichment Remedies’, [1992] Acta Juridica 203, 211. 42 The reasons for not incorporating a provision dealing with restitutio in integrum mainly relate to problems with its application in earlier times, and changed procedural views and institutions (Benno Mugdan, ‘Motive’, in: Mugdan, Die gesammten Materialien, vol. II, 566 ff.). It was considered unnecessary because the provisions on unjustified enrichment could perform this role satisfactorily (see Visser, ‘Rethinking Unjustified Enrichment’, 215 ff.). The actio quod metus causa likewise was dropped because general provisions were adopted on delict and unjustified enrichment, and there was a desire not to burden the code with unnecessary provisions (Mugdan, ‘Motive’, 423). The same was true of the condictio ex iniusta causa, which was used in the German ius commune law to reclaim illegally extorted bestowments (see Detlef K ¨ onig, Ungerechtfertigte Bereicherung: Tatbest ¨ ande und Ordnungsprobleme in rechtsvergleichender Sicht (1985), 47). 43 On the retrospective operation of rescission, and exceptions thereto, see Theo Mayer-Maly, in: M ¨ unchener Kommentar zum B ¨ urgerlichen Gesetzbuch (3rd edn, 1993), vol. I, § 142, n. 14 ff. 44 See Manfred Lieb, in: M ¨ unchener Kommentar zum B ¨ urgerlichen Gesetzbuch (3rd edn, 1997), vol. V, § 812, nn. 144, 148; Zimmermann, ‘Unjustified Enrichment’, 407; Englard, ‘Restitution of Benefits’, § 5-9. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-07 January 16, 2002 16:5 Char Count= 0 204 jacques du plessis has to regulate what has to be restored in so far as this has not already been done by specific rules of the law of contract. However, this still leaves the problem of ensuring some reciprocity in the restitution of what the parties performed. One solution is simply to say that rescission would not be granted if restitutio in integrum is impossible. 45 Such an approach could operate rather harshly on the victim, and therefore cannot be fol- lowed without exception. In this regard, it is of interest that Dutch law recognises the qualification that the victim may be protected by allowing ‘equitable monetary adjustments’. 46 However, in modern German law, the situation is viewed somewhat dif- ferently. In essence, the inability to provide restitution does not preclude rescission; the victim can obtain rescission, but the entitlement to and measure of enrichment-based relief is affected in three ways. First, under § 814 BGB the victim is not entitled to relief, if at the time of performance of a contract he knew that he was not obliged to perform. Thus, if he knew that the validity of the contract was tainted by fraud, but still performed, his enrichment claim would be barred. It can justifiably be asked why he did not refuse to perform when he had the chance. (It is obvious that the victim of duress has to be treated differently: it is precisely because of the compulsion that he cannot refuse even if he knows that he is not obliged to perform. Duress indicates that an enrichment remedy should not be barred.) In this regard it has been argued that the reason for excluding a claim where the transferor knew that the transfer was not due is to pre- vent him from acting contrary to his previous conduct (venire contra factum proprium). 47 Secondly, under § 819(1) BGB, the wrongdoer is not entitled to plead loss of enrichment or change of position if he was aware that he was not entitled to keep the enrichment. In other words, he cannot plead that his liability should be restricted to what remains in his hands, instead 45 See, for example, in the context of Scots law, Du Plessis, Compulsion and Restitution, 92 ff., 167 ff. 46 Art. 3:53 BW. On the position in the common law, see the contribution of Mindy Chen-Wishart to this volume. Although restitutio in integrum is regarded as a condition to rescission (see Erlanger v. New Sombrero Phosphate Co. (1878) 3 App Cas 1218 at 1278), it is also acknowledged that the innocent party’s right to rescind is not automatically barred due to his own inability to provide restitution (Robert Goff and Gareth Jones, The Law of Restitution (5th edn, 1998), 273 ff.; Treitel, Law of Contract, 350-1; Englard, ‘Restitution of Benefits’, §§ 5-74, 5-88). 47 See Peter Schlechtriem, in: Othmar Jauernig (ed.), B ¨ urgerliches Gesetzbuch (7th edn, 1994), § 814, nn. 1, 5; see further Markesinis, Lorenz and Dannemann, Law of Contracts, 736. On the influence of duress on the recoverability of undue transfers outside the contractual context, see section III, 2, (a) and (b), below. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-07 January 16, 2002 16:5 Char Count= 0 fraud, duress and unjustified enrichment 205 of the full extent of what he received. Thirdly, the wrongdoer is not pro- tected by the Saldotheorie, which seeks to ensure reciprocity in the return of transfers. 48 Although the BGB seems to have been drafted in a way which indicates that one is dealing with separate claims (this is the way in which the old ‘doctrine of the two enrichment claims’ or Zweikondik- tionenlehre also understood it), the Saldotheorie ‘combines the legal fates’ of these claims through a process of adjustment. 49 In essence, whenever a person’s performance has been destroyed while being retained by his contracting partner, he can raise the Saldotheorie against the partner’s en- richment claim. The defendant/enrichment debtor can only counterclaim to the extent that he is able to provide restitution. If he lost something worth more than his counterclaim, he in effect has no claim. However, since the wrongdoer who defrauds another is not entitled to the protec- tion of the Saldotheorie, the victim should be entitled to reclaim his full performance. 50 (b) The nature of enrichment-based remedies (i) Leistungskondiktion and its scope of application Against the background of the rescissory actions and restitutio in integrum, it can now be investigated what type of enrichment-based remedy will provide the victim with relief. In German law the code itself is rather unhelpful. All § 812(1), first sentence BGB states is that a person who ob- tains something without legal ground at the expense of another through a transfer by that person or in any other way is liable to return it. However, it will be noticed that in the code a distinction is drawn between obtaining something through a transfer (Leistung), and obtaining it in any other way. Nowadays, this distinction is regarded as crucial. 51 A typology has been de- veloped that places all enrichment claims involving a Leistung or transfer 48 See Englard, ‘Restitution of Benefits’, §§ 5-90, 5-278 ff.; Dieter Medicus, Schuldrecht II: Besonderer Teil (9th edn, 1999), § 129; Zimmermann and Du Plessis, ‘Basic Features’, 40 ff. 49 See Medicus, Schuldrecht II, § 129. 50 See BGHZ 53, 144; Englard, ‘Restitution of Benefits’, § 5-279. However, some adjustment based on contributory fault is possible. For criticism of the view that fraud should be an exception to the Saldotheorie in cases where there is no causal link between the misrepresentation and the harm giving rise to the law of enrichment, see Markesinis, Lorenz and Dannemann, 765. 51 See the pioneering works of Walter Wilburg, Die Lehre von der ungerechtfertigten Bereicherung nach ¨ osterreichischen und deutschem Recht (1934), and Ernst von Caemmerer, ‘Bereicherung und unerlaubte Handlung’, in: Festschrift f ¨ ur Ernst Rabel (1954), vol. I, 333 ff.; Markesinis, Lorenz and Dannemann, 717 ff. P1: FCH/FYX P2: FCH/FYX QC: FCH/UKS T1: FCH CU074-Johnston CHAPTER-07 January 16, 2002 16:5 Char Count= 0 206 jacques du plessis in the domain of a remedy called the Leistungskondiktion. All other cases are classified under three other categories, of which the most notable is the Eingriffskondiktion or enrichment claim based on encroachment. 52 For present purposes, the Leistungskondiktion is of particular importance. According to the prevailing view, this remedy is available when some- one has made a Leistung – that is, intentionally enlarged another’s estate with a specific purpose in mind 53 – and this purpose for some reason or another then failed. As Dieter Reuter and Michael Martinek put it, ‘in the case of the Leistungskondiktion the lack of the legal ground for the Leistung lies in the failure of its purpose’. 54 Since the Leistungskondiktion unites various cases of retention without legal ground brought about by a transfer, it is not surprising that German authors have found it conve- nient to categorise the fields of application of this remedy along the lines of the condictiones of Roman law. 55 According to the prevailing view, the Leistungskondiktion in its condictio indebiti guise would then be applied when the purpose of a transfer failed because the intended discharge of a debt did not materialise. 56 After all, the condictio indebiti is the civil-law remedy par excellence for the recovery of an indebitum, or transfer which is not due or owed. However, there is also a minority opinion, which regards the em- phasis on the purpose of the transfer as unnecessary. To the supporters of this view, the legal ground for a Leistung is simply the relationship of indebtedness to which it pertains. 57 A contract of sale, for example, pro- vides such a relationship when the Leistung takes the form of a payment of the purchase price. Whether it was intended to achieve the purpose of payment is not relevant if the relationship of indebtedness existed in any event. Thus, if the purchaser in this example accidentally pays the purchase price twice, but also happens to owe the seller a separate debt 52 On these various remedies, see Markesinis, Lorenz and Dannemann, 717 ff., 740 ff., 752 ff. 53 See BGHZ 40, 272 (277); BGHZ 58, 184 (188). 54 Dieter Reuter and Michael Martinek, Ungerechtfertigte Bereicherung (1983), 125. 55 See Dieter Medicus, B ¨ urgerliches Recht (18th edn, 1999), n. 689; Reuter and Martinek, Ungerechtfertige Bereicherung, 125 ff.; Hans-Georg Koppensteiner and Ernst Kramer, Ungerechtfertigte Bereicherung (2nd edn, 1988), 49 ff.; for criticism see Markesinis, Lorenz and Dannemann, 719. 56 See Medicus, B ¨ urgerliches Recht, n. 689; Koppensteiner and Kramer, Ungerechtfertige Bereicherung, 50; Reuter and Martinek, Ungerechtfertige Bereicherung, 126 ff. 57 See Karl Larenz and Claus-Wilhelm Canaris, Lehrbuch des Schuldrechts (13th edn, 1994), vol. II/2 § 67 III 1. It might seem as if this approach is unable to deal with the datio ob rem, which is not supported by an obligation at the time of transfer. However, such a datio is still supported by an underlying understanding as to the basis on which it is to be held by the recipient. This is regarded as sufficient to justify the retention of what has been given by the recipient. [...]... one party injured the other by disavowing the contract after he had changed his position in reliance upon it, and yet the party committing the injury is not at fault because he is a minor, an insane person, or otherwise incompetent (a) Wrongfully inducing the other party to contract Suppose the defendant fraudulently induced the plaintiff to buy a car, and that the car has been destroyed Lord Denning... Allgemeiner Teil des BGB (20th edn, 1996), nn 42 5, 41 3 On culpa in contrahendo in general, cf Larenz, Lehrbuch, § 9 I; Friedrich Kessler and Edith Fine, ‘Culpa in Contrahendo, Bargaining in Good Faith, and Freedom of Contract: A Comparative Study’, (19 64) 77 Harvard LR 40 1 ff P1: FCH/FYX P2: FCH/FYX CU0 74- Johnston QC: FCH/UKS CHAPTER-07 222 T1: FCH January 16, 2002 16:5 Char Count= 0 jacques du plessis in uenced... the rei vindicatio, or recover in tort, or recover in contract At that point, they either had to live with the consequences of the doctrine of Wegfall or invent some excuse for not applying it But could it not be that the reasons for allowing the 12 13 14 Luis de Molina, De iustitia et iure tractatus (Venice, 16 14) , disp 718, n 2; Leonard Lessius, De iustitia et iure ceterisque virtutibus cardinalis... (last remaining) fields of application of the Leistungskondiktion in its condictio ob turpem vel iniustam causam guise are in fact ‘extortion-related’ situations, but this again applies to payments which are not due.102 It may further be argued that duress amounts to a type of Eingriff or encroachment, but (as pointed out before) in cases of extortion we are still dealing with a Leistung or ‘giving’, rather... financial adjustment which falls to be made is one which is an integral element in the granting of restitutio in integrum, or is one which is collateral to it, and so should form the subject of a distinct claim for damages’ (at 511G) On the relationship between restitutio in integrum and enrichment remedies in South African law, see Visser, ‘Rethinking Unjustified Enrichment’, 215 ff Jauernig, B¨ rgerliches... vol IX, § 79 On the problems surrounding the determination of the key requirements of the condictio indebiti in another mixed jurisdiction, namely Scots law, see Robin Evans-Jones, ‘Unjust Enrichment, Contract and the Third Reception of Roman law in Scotland’, (1993) 109 LQR 643 ; also his ‘Some Reflections on the Condictio Indebiti in a Mixed Legal System’, (19 94) 111 SALJ 759; Du Plessis, Compulsion... function by indicating that someone acted in error (that is, wrongly believed a debt was due), while duress shows that there was no indication that a transfer could be retained They therefore show that, in both instances, the victim’s frame of mind was of such a nature that relief should not be barred However, there is a further related but distinct function of these improper methods of obtaining consent... leads to senseless results as long as it is confined to its original scope, using it to resolve the problems it was originally meant to resolve II The original scope of the doctrine These problems become clear if the origin of the doctrine is examined The drafters of the German Civil Code took the doctrine from the nineteenthcentury pandectists, Windscheid and Savigny Savigny seems to have taken it from... bilateral act, or with what intention it has to be made In the ius commune, no particular doctrinal approach prevailed either. 84 It is not surprising then that the position in modern civilian systems is anything but settled.85 Here only a brief review of the main approaches to the nature of performance will be attempted Particular emphasis will be placed on the position in German law, where the debate... between the parties that a transfer is intended to fulfil a specific obligation.86 Since such an agreement would require valid declarations of intent, fraud or duress could conceivably affect the validity of performance However, this approach has difficulties in accommodating performance through rendering a service or omission, where 83 84 85 86 See Ulp D 50, 16, 176; 12, 6, 63; 46 , 3, 54; 46 , 3, 80 pr.; . 211. 42 The reasons for not incorporating a provision dealing with restitutio in integrum mainly relate to problems with its application in earlier times, and changed procedural views and institutions. vol. I, § 142 , n. 14 ff. 44 See Manfred Lieb, in: M ¨ unchener Kommentar zum B ¨ urgerlichen Gesetzbuch (3rd edn, 1997), vol. V, § 812, nn. 144 , 148 ; Zimmermann, ‘Unjustified Enrichment’, 40 7; Englard, ‘Restitution. Schuldrecht, § 270. 97 Paul. D. 44 , 4, 8 pr.; D. 50, 17, 173, 3. 98 See Zimmermann, Law of Obligations, 668. The accompanying example in Paul. D. 44 , 4, 8, 1 indicates a more restricted scope