(iii) A Middle Way

What is needed is a statutory mechanism which adequately protects both the restitutionary and the reliance interests but without recourse to an unrestrained judicial discretion. The preferable solution is to adopt the model of the British Columbian Frustrated Contracts Act 1974. The general scheme of that Act is that each party must make restitution in respect of anything done by way of contractual performance by the other.[1] For the purposes of this Act a broad definition of benefit is adopted encompassing ‘something done in the fulfilment of contractual obligations whether or not the person for whose benefit it was done received the benefit’.[2] Consequently, the defendant should be deemed to have been benefited either where he or she had obtained a benefit from the claimant or where the claimant had incurred expenditure in relation to the performance of the contract. Whilst such a broad notion of ‘benefit’ may be somewhat misleading, this simple technique of expanding what is meant by benefit will ensure that the defendant is not allowed to retain any unjust enrichment, and also that the expenditure which the claimant incurred may be recovered. If the defendant had also incurred expenditure he or she would either be able to set this off against the claimant’s claim or bring a claim him or herself for restitution from the claimant. Whilst this statutory regime cannot be considered to be completely restitutionary, since the defendant’s liability is not confined to the benefit which he or she had received, it would at least operate within the framework of the law of restitution. In addition, the British Columbian Act provides that, where the effect of the frustrating event is to diminish the value of the contractual performance, the losses should be shared equally between the parties.[3] This is less convincing, since it is more just for losses to be apportioned according to the particular circumstances of the case.

  • [1] British Columbian Frustrated Contracts Act 1974, s 5(1). 2 Ibid, s 5(4).
  • [2] 337 Ibid, s 5(3). 4 Consumer Rights Act 2015, s 20(10). 339 Ibid, s 20(11).
  • [3] 340 Meaning an individual who is acting for purposes which are wholly or mainly outside his or her trade,
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