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(B) THE KEY POLICIES WHICH DETERMINE WHEN A MISTAKE SHOULD GROUND A RESTITUTIONARY CLAIM

There are four policies which are relevant to the identification of the appropriate test for determining when mistake should operate as a ground of restitution.

(i) Security of Transactions

Restitution for mistake should not be used to undermine transactions unnecessarily. Defendants need to have a degree of security that, when they receive benefits, they will not be required to make restitution unless there is a good reason to do so. This policy favours a restrictive interpretation of mistake as a ground of restitution.

(ii) Risk Allocation

Where the parties to a contract have expressly or implicitly allocated the risk that one or both of them may be mistaken as to particular facts, it is not for the law of restitution to intrude and subvert that allocation of risk. This policy also favours a restrictive interpretation of mistake.

(iii) Concoction of Claims

There is a danger that claimants will concoct claims that they were mistaken when they transferred a benefit. It is easy for the claimant to assert that he or she was mistaken, since this simply depends on the state of his or her mind at the time the benefit was transferred, and it is difficult for the defendant to deny this. Again, this policy favours a restrictive interpretation of mistake.

 
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