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Home arrow Law arrow The principles of the law of restitution
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(i) The Common Law

At one stage the attitude of the common law to restitutionary claims following the frustration of a contract was to reject such claims and to let the loss lie where it fell.283 However, in Fibrosa Spolka Akcyjna v Fairbairn Lawson Combe Barbour Ltd284 the House of Lords recognized that money, which had been paid pursuant to a contract which was subsequently frustrated, could be recovered, but only if the basis for the payment had totally failed. In that case the claimants had entered into a contract with the defendants for the purchase of machinery. The claimant paid one third of the purchase price in advance [1] [2] [3] [4] [5] [6] [7]

but the contract was frustrated by the outbreak of the Second World War before any of the machinery had been delivered. It was held that the claimant could recover the advance payment because the basis for that payment had failed totally and also that the defendant was not able to set off the expenditure which it had incurred in preparing the machines for delivery under the contract.

That restitution will not lie where the basis had partially failed is illustrated by Whincup v Hughes[8] where a father had paid a sum of money to have his son apprenticed to a watchmaker for six years. The watchmaker died after one year, frustrating the contract. It was held that the father could not recover the money paid in respect of the remaining five years because the basis for the payment had only failed partially, since the benefit of one year’s service had been received.

  • [1] Law Reform (Frustrated Contracts) Act 1943, s 2(5).
  • [2] J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyd’s LR 1.
  • [3] For detailed examination of this question see GH Treitel, Frustration and Force Majeure (3rd edn,London: Sweet and Maxwell, 2014).
  • [4] [1956] AC 696,729. See also National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675, 700 (LordSimon).
  • [5] J Lauritzen AS v Wijsmuller BV (The Super Servant Two) [1990] 1 Lloyd’s LR 1, 10 (Bingham LJ).
  • [6] See A Stewart and JW Carter, ‘Frustrated Contracts and Statutory Adjustment: The Case for aReappraisal’ (1992) CLJ 66, 108.
  • [7] Chandler v Webster [1904] 1 KB 493. 284 [1943] AC 32.
  • [8] (1871) LR 6 CP 78. See further p 323, above.
 
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