PARTIAL FAILURE OF BASIS

Although the most common ground of restitution which is founded on the principle of failure of basis is that of total failure of basis, and even though that ground of restitution has been interpreted in such a way that effectively restitution is being awarded on the ground of partial failure of basis, in one particular situation the applicable ground of restitution is specifically partial failure of basis, namely where the contract has been frustrated.

Where benefits have been transferred in respect of a contract which is later frustrated, the restitutionary regime is, for the most part, governed by the Law Reform (Frustrated Contracts) Act 1943. This statute was enacted in the light of the unsatisfactory nature of the common law regime concerning the consequences of a contract being frustrated. Unfortunately the common law regime still applies to certain contracts, including contracts for the carriage of goods by sea, contracts of insurance and contracts for the sale of goods where the goods have perished.²⁷⁷ Where the common law applies, the ground of restitution continues to be that of total failure of basis, whereas under the Law Reform (Frustrated Contracts) Act 1943 the ground of restitution is effectively partial failure of basis, although this phrase is not used in the statute itself.