A Consideration Which Happens to Fail

Abstract

Recent English commentary employs the timeworn expression “failure of consideration” in an unprecedented way. It can now designate an expansive residual category of grounds for restitution: at its fullest, “the failure to sustain itself of the state of affairs contemplated as a basis” for a transaction by which one party is enriched at the expense of another. (Because the result is plainly to incorporate a civilian-style “absence of basis” test within common-law unjust enrichment, the new “failure of consideration” carries an incidental implication for Canadian restitution law: if Garland v. Consumers’ Gas really announced a shift from common-law “unjust factors” to civilian “absence of basis,” the change may not make that much difference.) Contrasting approaches to “failure of consideration” illustrate a broader difference in attitudes toward “restitution in a contractual context”: English law looks “off the contract” in situations where US law finds answers in the contract itself.

Keywords: Contract law, failure of consideration, American Restitution

JEL Classification: K00, K120