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Eoin O'Dell raises a number of interesting issues concerning the relationship between restitution and contract, but I wish to comment only on one aspect of what Eoin says, namely the operation of doctrines, such as undue influence, which are employed both by the law of contract and the law of restitution. I briefly addressed this issue in a review article in the 1996 MLR (603, at 610-12), in the course of commenting on the Birks and Chin piece 'On the Nature of Undue Influence'.

Broadly speaking I think that what I said in the MLR fits with Eoin's analysis. The starting point is that there are a number of doctrines (eg mistake, duress, and undue influence) which operate both as vitiating factors in contract, and as unjust factors in restitution. The issue I addressed was whether the rules of these doctrines should differ according to whether the the person invoking the doctrine is seeking to set aside a contract or simply to recover a non-contractual benefit. One reason for drawing this distinction is, as Burrows points out (p. 107) that, in setting aside a contract, the court is 'disappointing bargained-for considerations'. I argued that another reason for differentiation was that while the restitutionary defendant who had relied on the validity of the payment should now be protected by the defence of change of position, the other party in a contract situation is not necessarily protected against the consequences of his or her reliance on the validity of the contract if the contract is struck down. Hence, it seemed right that the test for mistake in contract should be narrower than that in restitution (cp. Bell v Lever Bros and Barclays Bank v Simms; and see Waller J in Midland Bank v Brown Shipley & Co).

What was equally clear, however, was that when it came to duress and undue influence, the distinction was not (at least not overtly) recognised. The rules seemed the same regardless of whether it was contract or restitution. This made sense if these doctrines were defendant-sided, for then the defendant had behaved badly, and so his or her contractual expectations/detrimental reliance did not merit protection (just as, in restitution, wrongdoers ought not to be able to invoke the change of position defence). My point was simply that if in fact undue influence was plaintiff-sided (as Birks and Chin argued) then, as in mistake, the contract doctrine ought to be narrower than the restitution doctrine, since in that case the other contract party could be completely innocent, and thus his or her expectations/reliance deserved more protection.

Eoin arrives at a similar conclusion, when he says that the exploitation approach to undue influence might be used where the issue is setting aside a contract, whereas the Birks and Chin approach could be employed in restitution cases. On this analysis, Birks and Chin are correct in saying that undue influence is plaintiff-sided, but only in the context of non-contractual benefits, not where the doctrine is employed to set aside a contract.

One thing I would add is that it seems to me to be rather unfortunate that in, for example, a contract mistake case, whether the contract is held to be void for mistake is determined by the contract doctrine of mistake, and that one then goes on to apply the restitutionary doctrine of mistake to determine whether benefits conferred under the void contract are recoverable. I would have thought that failure of consideration was a preferable unjust factor in this situation (see eg Rover v Cannon Film Sales), since the use of a different doctrine would highlight the distinction which Eoin emphasises between the validity of the contract and the appropriate remedial responses if the contract is invalid (cp. Eoin's example of frustration/failure of consideration). However, I take the point that in the past the total failure requirement has made mistake a more attractive option for many plaintiffs.

Donal Nolan
Lecturer in Law
School of Law
King's College London
Strand
London WC2R 2LS

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