(iii) The Consequences of Recognizing Partial Failure of Basis
If partial failure of basis was recognized as a general ground of restitution in its own right the key consequence would be that, to the extent that any part of the anticipated basis for a transfer of an enrichment had failed, restitution should be available. Where the claimant had received some benefit from the defendant this would need to be valued and the claimant would be required to make counter-restitution of that value to the defendant. There would still be an advantage for the claimant to show that the basis had failed totally, for then there would be no obligation to make counter-restitution.
If partial failure of basis was recognized as a general ground of restitution its operation could potentially cause difficulties in those cases where the basis had not failed totally but the claimant had received no specific benefit from the defendant, as illustrated by the cases where the defendant had agreed to build and deliver a ship which he had started to build before the contract was discharged.[1] Although the claimant should be able to obtain restitution of the benefit which had been transferred to the defendant on the ground of partial failure of basis, how should the work done by the defendant be taken into account? Should this work be valued and this amount be deducted from what the defendant is required to restore to the claimant? This would mean that the claimant is required to make counter-restitution to the defendant in respect of a benefit which the claimant had not actually received. Consequently, since the claimant had not received any benefit, it might be concluded that the claimant is not required to make counter-restitution to the defendant because the claimant had not been unjustly enriched. The better view, however, is that the solution should depend on the appropriate construction of the contract. If the defendant’s promised performance includes work as well as sale, the claimant should be considered to have freely accepted the work done by the defendant, and so should be estopped from denying that he or she had not actually received a specific benefit from the defendant.[2] [3] Such a result would at least be consistent with the rationale of the build and sale cases, where the building of the ship is considered to constitute part of the basis for the advance payment.
