This is not a tale of nature conservation or event protecting another threatened animal species. But it is a story about preserving some basic principles of justice in the very harsh environment of business.
Urban legend has it in the jungle of commerce that if there is “no contract, then no obligations and no rights” follow. It is a popular misconception. Lawyers all around the globe (should) know better. And those legal eagles should also make it clear to clients and company managers alike that regardless of the legal system, obligations and rights can (and frequently do) arise outside the cave of contract law. For example, a law court will often allow an action where a party has gained an unjustifiable (financial) advantage – even if this is not covered by a contract.
That is how we come to meet ungerechtfertigte Bereicherung and other devices in the German Civil Code (BGB) or actio de in rem verso in French jurisprudence, to name but two jurisdictions. Nor are these concepts limited to the Civil Law countries. Across in the Common Law camp, courts such as those in England have long been walking well-worn paths for the destinations of unjust enrichment and restitution.
Thus, we come to the recent case of Dowman Imports Ltd v 2 Toobz Ltd (2020) EWHC 291 (Comm). The defendant, 2 Toobz Ltd, designed soft toys. It successfully patented a concept for a new toy and sought to create a range of these toys known as “Bush Babies”. The claimant, Dowman Imports Ltd, is a toy manufacturer and supplier. For a period of over 20 months from 2014 to 2016, the claimant worked on the development of market-ready Bush Babies under the direction of the defendant. There was an “understanding“ to the effect that in return for such development services the claimant would later be appointed as the manufacturer of the Bush Babies. However, in 2016 the defendant decided on a different company to produce the Bush Babies.
In court the claimant asked for restitution of the value of the development services provided to the defendant. The High Court agreed with the claim and held that even though there was no formal contract between the parties for the work, a future manufacturing contract was part of an “understanding” and the preparation services were not merely speculative. Reasonable compensation for the services was due: quantum meruit.
This case was not “new law”. It is a confirmation of what we all should know and expect. It is, in its own way, an anecdote of judicial conservation and the preservation of basic principles.
Save undue enrichment! Justice for the Bush Babies!