Law Commission Report on Pecuniary Restitution on Breach of Contract

Publication Date01 Jan 1984
AuthorA. S. Burrows
DOIhttp://doi.org/10.1111/j.1468-2230.1984.tb01638.x
REPORTS
OF
COMMITTEES
LAW COMMISSION REPORT ON PECUNIARY
RESTITUTION ON BREACH
OF
CONTRACT
THE
Law Commission has finally recommended’ only one of the
three reforms which it had previously provisionally recommended in
its working pape? in this field. The suggested reform approved
would give the party in breach a restitutionary remedy for the value
of his part performance in an entire contract. On the other hand,
the commission has rejected the provisional recommendation that
an innocent party should be entitled to recover money paid even for
a partial failure of consideration. The other provisional recommen-
dation, that where a seller has delivered goods with defective title,
the buyer should give credit for his use and possession of the goods,
was not considered because it was thought more appropriate to deal
with it in the forthcoming working paper on the supply of goods.
THE
RECOMMENDED REFORM-RESTITUTION
FOR
THE
CONTRACT-
BREAKER’S PART PERFORMANCE
IN
AN
ENTIRE
CONTRACT
An entire contract is one in which complete performance by one
party is a condition precedent to the other’s liability to pay the
agreed price.3 The rule of
Cutter
v.
Powell4
is that in such a contract,
no remedy, apart from an innocent party’s remedies for breach, is
available to the part-performer; and while there are several
well-
established exceptions to it,5 this rule generally continues to deny
the party in breach a remedy for his insubstantial part performance.
According to the commission this is unsatisfactory because it can
leave the innocent party unjustly. enriched.6
Bolton
v.
Mahadeva’
illustrates the point. Mr. Bolton agreed to install a heating system
in Mr. Mahadeva’s home for
€560.
He broke the contract by
installing a system that did not heat adequately and gave out fumes;
although he was requested to remedy the defects he did not do
so.
The cost of putting the system into satisfactory working order was
€174.50.
The Court of Appeal held that Mr. Bolton was not entitled
to the contract price nor any part of it. The result meant that Mr.
Mahadeva was in a far better position than he would have been if
Mr. Bolton had fully performed his contract, because he retained
~ ~~ ~
Law Commission no. 121,
Law
of
Contract; Pecuniary
Restirution
on
Breach
of
Contract
(1983). Hereinafter page and paragraph references are
to
this report, unless otherwise
stated.
It will be assumed throughout that the counter-performance is the payment
of
an
agreed price although
it
may comprise any other act
or
forbearance; see draft bill, cLl(6).
Chirty
on
Conrracts
(1983),
paras.
1402-1404,
1579.
W.P.
para. 19.
2
Law Commission Working Paper no. 65 (1975) (hereinafter “W.P.”).
(1795) 6
T.R.
320.
[1972]
1
W.L.R. 1009.
76

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