Restitution
front page

What's new?

Archive front page

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2007

2006

2008

2009

Dear Andrew:

How is explaining common mistake or frustration as a rule of law better than saying that the whole tenor of the agreement objectively interpreted is consistent with the implication that these obligations were not to bind in certain circumstances (a natural law position). More importantly, the rule of law route is a cop-out since it does not explain why there should be such a rule of law. If the best that the CA can come up with is that a rule exists because the judges said so or for some unnamed criteria of policy or fairness, then the English common law understanding of this area is quite impoverished.

Andrew Dickinson wrote:

I agree with Robert. Implied contractual terms are an unsatisfactory way of explaining frustration or common mistake (where both parties have reached an objective agreement on an equal footing) (see Great Peace Shipping v. Tsavliris [2003] QB 679, [73] (CA) ("What do these developments in the law of frustration have to tell us about the law of common mistake? First that the theory of the implied term is as unrealistic when considering common mistake as when considering frustration. Where a fundamental assumption upon which an agreement is founded proves to be mistaken, it is not realistic to ask whether the parties impliedly agreed that in those circumstances the contract would not be binding. The avoidance of a contract on the ground of common mistake results from a rule of law under which, if it transpires that one or both of the parties have agreed to do something which it is impossible to perform, no obligation arises out of that agreement.").

They are an even less satisfactory way of explaining vitiating factors such as misrepresentation, duress and undue influence, where the conduct of one party (innocent or otherwise) has unbalanced the relationship in such a way as to justify the other being given the legal option, subject to certain qualifications, to undo the bargain (see John Cartwright's analysis in- "Unequal Bargaining"). Sometimes that option is exercisable unilaterally (e.g. rescission at common law for fraud) and sometimes it requires the sanction of the court (e.g. rescission in equity for undue influence). The remedy of rescission, in many cases, also effects restitution between the parties. The idea that an implied contractual term is necessary, or appropriate, to achieve this result over-complicates the analysis and is reminiscent of the argument that the reversal of unjust enrichment was itself founded on an implied contract.