I most strongly disagree with the proposition that Barclays Bank v O'Brien states a defendant-sided unjust factor. In my view, it does not state any unjust factor at all, as it is not a restitution case, but a contract case.

The lessons of the Westdeutsche (and related) litigation are many, but one of them is the invalidity of a contract and a consequential restitutionary remedy are two separate matters. Thus, a contract can go off for incapacity or for some other reason of contract law, company law, equity, and so on. This then provides the occasion for a possible restitutionary remedy by the application of the four enquiries.

It is the same for mistake. A contract can go off for mistake (in contract, as defined, eg, by Bell v Lever Bros); that provides the occasion for the four enquiries, one of which relates to the unjust factor. There are several available: the facts which satisfy the test for mistake in contract may also independently satisfy the test for mistake in restitution (as stated eg in Barclays Bank v Simms), or the plaintiff's mistaken belief in the existence of a valid contract may provide the unjust factor, or the facts may amount to a failure of consideration. Again, it is clear that the reason why the contract goes off is separate from the reason why any consequential remedy in restitution is available.

It is the same for coercion. When a contract is set aside for duress at law or for undue influence at equity, that is the relevant contract doctrine at work. When there is a consequential remedy in restitution, that is because the test for the unjust factor of coercion is independently satisfied. Remember mistake again: contract goes off for mistake (Bell v Lever Bros); restitution for that mistake (Barclays Bank v Simms); similarly, here there are two separate enquiries: whether the contract (according to the test put forward by the law of contract) is a valid contract, and, if not, whether (according to the test put forward by the law of restitution) there ought to be a restitutionary remedy.

Barclays Bank v O'Brien and its extensive progeny merely state the test to be applied as a matter of contract to determine the validity of a contract. Thus, where A unduly influences B to contract with C, the test in Barclays Bank v O'Brien simply determines the validity of the contract between B and C. It does no more.

Finally, neither in O'Brien, nor in any subsequent case, has there been a claim for restitution. Every single such case has been as to whether the Bank C can enforce the contract as against the surety (usually wife) B. No case has arisen in which B has sought restitution from C. Thus, O'Brien and its progeny form part of the law of the contract, and have no place in the law of restitution (in exactly the same way as the doctrine of ultra vires is part of the law of contract relating to companies and has no place in the law of restitution). The invalidity of the contract for the undue influence, like the ultra vires, may form the occasion for the restitution analysis, but it is not an element of the restitution analysis.

As to the restitution analysis consequent upon the invalidity of the contract on O'Brien principles, where A has unduly influenced B to contract with C, and on O'Brien principles the contract between B and C is invalid, if B has paid C, B can recover in restitution from C simply on the (plaintiff-sided) ground of vitiation of consent by coercion (the undue influence), subject to certain defences C might have (see [1997] CLJ 71 for more on this).

Eoin O'Dell.

P.S. Why is it that so many leading cases have Barclays Bank as plaintiffs ?

EOIN O'DELL
Barrister, Lecturer in Law
Trinity College
Dublin 2
Ireland

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fax (+ 353 - 1) 677 0449

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(All opinions are personal; no legal responsibility whatsoever is accepted.)