The German of Unjustified Enrichment and

A Comparative Introduction

GERHARD DANNEMANN

OXFORD UNIVERSITY PRESS Contents

Table of Cases xv

I: UNJUSTIFIED ENRICHMENT AND RESTITUTION IN GERMAN LAW 1. Introduction 3 1. The law of unjustified enrichment within the German Civil Code 6 2. From Roman condictiones to a general unjustified enrichment clause 8 3. The unjustified enrichment model of restitution 11 1. Unjustified enrichment in a nutshell 11 2. Applications of the unjustified enrichment model outside §§ 812^822 BGB 12 4. Six other models of restitution 13 1. The termination of contract model 13 2. The negotiorum gestio model 14 3. The tort model 14 4. The owner/possessor model 15 5. The substitution model 16 6. The cessio legis model 17 5. Conclusions 18

2. The Undoing of Performance: Basics 21 1. The performance/non-performance divide 21 2. Enrichment of the defendant 25 1. Enrichment 25 2. Of the defendant 29 3. At the expense of the claimant 30 1. Expense 30 2. Of the claimant 31 4. Must the shift be direct? 33 x Contents 5. Intent and purpose 34 6. 'Without legal ground': absence of basis 35 1. Functions of legal ground 35 2. Embedding legal ground in German 37 A. Gratuitous contracts 37 B. Requirements of form 38 C. Limitation of claims 40 D. Gaming and betting 40 E. Ground as purpose 41

3. The Undoing of Performance: Refinements 45 1. Specific condictiones based on performance 45 1. Condictio causa data causa non secuta 45 2. Condictio ob causamfinitam 49 3. Performance in spite of defence 50 2. Performance between three or more parties 50 3- Termination of contract 60 1. Restitution in kind 62 2. Restitution of value 62 A. Contractual price as yardstick 63 B. Restitution without counter-restitution 64 C. Remaining enrichment 67 3. Benefits derived from performance 69 4. Interest 72 5. Recovery of expenditure 73

4. Defences Against Performance-based Claims 75 1. Claimants knowledge of lack of legal ground 76 2. Claimant's moral obligation 79 3. Claimant's own wrongdoing 79 1. Introduction 79 2. All performances can be returned in kind 83 3. Not all performances can be returned in kind 83 A. Recovery of quantum meruit 83 B. Recovery of payments 85 4. Explanations 85 5. Further extensions and restrictions of§ 817 sent. 2BGB 86 Contents xi

5. Restitution Not Based on Performance 87 1. General observations 87 2. Interference with claimant's rights 88 1. The owner/possessor model 89 2. Eingriffskondiktion 91 A. Wrong, Eingriff, and attribution 92 B. Without legal ground 101 C. Enrichment without impoverishment 102 D. Defences, passing on 103 3. Unjustified negotiorum gestio 104 4. Interference by operation of the law 105 3. Unauthorized expenditure 107 1. The owner/possessor model 108 2. Negotiorum gestio 110 3. Verwendungskondiktion 113 4. Performance of defendant's obligation 116 1. Cessio tegis 117 2. Contractual claim for recovery 117 3. Negotiorum gestio 118 4. Ruckgriffskondiktion 118

6. The Measure of Resritutionary Liability 123 1. Restitution in kind 124 2. Tracing and substitution 126 1. Tracing and related proprietary techniques 126 2. Substitution 128 3. Secondary benefits and gain-based recovery 132 4. Restitution in money and methods of valuation 135 1. Objective methods of valuation 135 2. Subjective methods of valuation 136 3. Imposed enrichments 137 5- Disenrichment (change of position) 138 1. Disenrichment as measure of liability 139 2. Disenrichment and counter-restitution 141 3. Disenrichment and third parties 145 6. Increased liability 146 1. Matters pending before a court 146 2. Mala fide defendant 147 3. Defendant aware of uncertainty 147 xii Contents

7. Concurrent Liability 149 1. Concurrent liability within unj ustified enrichment 149 2. Unjustified enrichment and contract law 150 3- Unjustified enrichment and negotiorum gestio 151 4. Unjustified enrichment and tort law 151 5. Unjustified enrichment and property law 151

II: THE WIDER COMPARATIVE PERSPECTIVE 8. Classification and Consequences 155 1. Scope, taxonomy, and approach 155 1. Scope 155 2. Taxonomy 156 3. Approach 158 A. Kelly v Solari and the man on die Clapham omnibus 158 B. Moses v Macferlan and Lord Mansfield 160 2. A tale of unexpected similarities 162 1. Introduction of a general rule 162 2. Rejection of the principles of and natural justice 164 3. Elaboration and expansion of lists 165 4. Restrictions of the general rule 168 5. Partial oblivion 171 6. Rationalization of the general rule 175 3. Conclusions 178

9. Lessons to Be Learned? 179 1. Introduction 179 2. Bases for enrichment in English law 181 1. Property and intellectual property law 181 2. Contract law 181 A. Limitation of claims 184 B. Requirements of form 185 C. Contracts beyond the capacity of minors 188 Contents xiii

3. Non-contractual agreements 189 A. Gifts and trusts 190 B. Gratuitous use 190 C. Gratuitous services 192 3. Adjustments within 195 1. Wider scope of unjust factors 195 2. Wider scope of absence of basis 196 A. 'Rising heat'—non-performance enrichments 196 B. Enrichment between three or more parties 198 C. Execution of ill-founded disputed claims 200 4. Lessons for German law 205 1. Reducing and consolidating models of restitutionary liability 205 2. Reducing and consolidating types of unjustified enrichment claims 208 3. Developing rules rather than resorting to good faith 209 5. Conclusions 210

HI: CASES AND STATUTES 10. Cases 217 1. BGH21.12.1956,BGHZ23,61 (unwanted building) 218 2. BGH 25.3.1963, BGHZ 39,186 (bombed site) 221 3. BGH 20.6.1963, BGHZ 40,28 (fire brigade) 224 4. BGH 31.10.1963, BGHZ 40,272 (electrical appliances) 227 5. BGH 11.1.1971, BGHZ 55,176 (young bulls) 233 6. BGH 14.10.1971, BGHZ 57,137 (wrecked car) 237 xiv Contents 7. BGH 7.1.1971, NJW1971,609 (underage flyer) 242 8. BGH 19-1.1984, BGHZ 89,376 (standing order) 249 9. BGH 15.5.1986, NJW 1986,2700 (accident insurance) 254 10. BGH 9.3.1989, BGHZ 107,117 (toxicity research) 259 11. BGH 23.2.1990, NJW-RR1990,827 (embezzlement) 263 12. BGH 31-5.1990, BGHZ 111,308 (black labour) 265 13. BGH 20.6.1990, BGHZ 111,382 (incapacity) 268 14. BGH 17.6.1992, BGHZ 118,383 (overpaid maintenance) 271 15. BGH 5.1O.1993.NJW 1994,187 (honorary consul) 280 16. BGH 5.11.2002, BGHZ 152,307 (credit broker) 283 17. BGH 9.7.2008, NJW 2008,3277 (non-marital property) 290

11. Selected Provisions of the German Civil Code 297

Select Bibliography 315 Glossary of German Legal Terms 319 Index 323