(C) THE NEED FOR PRINCIPLED REFORM
Subsections 1(2) and 1(3) of the 1943 Act are somewhat schizophrenic provisions, embodying as they do both principles of restitution founded on the reversal of the defendant’s unjust enrichment and the allocation of losses between the parties. But this attempt to allocate losses is half-hearted. There are a number of situations where a party will have incurred expenditure but he or she will not be able to recover it, even if the court considers this to be just. For example, the defendant’s expenditure incurred in connection with performance of the contract before it was frustrated can only be recouped if the claimant had paid or was liable to pay money to the defendant or the defendant had received a valuable benefit from the claimant. Would it not be better to replace the 1943 Act with a new scheme whereby all the losses of the parties which arise from the contract being frustrated may be apportioned between them?
(i) Arguments Against Loss Apportionment
Burrows is not convinced that there is a need for a statutory regime which involves the apportionment of losses.[1] This is for a number of reasons. For example, the traditional approach of the law of contract is that each party should take the risk of loss arising from frustration rather than having that loss apportioned between them. Also loss apportionment can result in uncertainty, and if we really want to apportion losses it will be necessary to take into account the relative fault of the parties, adding to the complexity of the analysis. His conclusion is that the case for loss apportionment is unproven and that the award of restitutionary relief achieves sufficient justice following frustration. Stewart and Carter also reject a scheme of loss apportionment on the ground that there is no reason why one party to a contract should act as an insurer for the loss suffered by the other party, by having to bear some or all of the other’s loss.[2] They consider that a common law scheme which is simply founded on the principle of reversing unjust enrichment is perfectly adequate. But the refusal of the English courts so far to recognize partial failure of basis as a ground of restitution surely makes reliance on the common law of restitution inadequate in this context.
