LEGAL PRINCIPLE: CONTRACT LAW – Breach of Contract – Rescission for Breach – Restitutionary Remedies Available – Total Failure of Consideration
PRINCIPLE STATEMENT
The law recognises the restitutionary remedies of an innocent party who has opted to rescind de futuro a contract by reason of the serious breach of the other party; a party who has wholly or in part performed their side of the contract and not received the agreed counter-performance in full may sometimes be entitled to restitution in respect of their own performance; where a contract is avoided for breach, the innocent party is entitled to restitution where there is a claim of total failure of consideration; a complete failure of consideration in a contract occurs where one of the contracting parties fails to receive the benefits of valuable consideration which springs from the roots, and is the essence, of the contract.
RATIO DECIDENDI (SOURCE)
"The law recognises the restitutionary remedies of an innocent party who has opted to rescind de futuro a contract by reason of the serious breach of the other party. A party who has wholly or in part performed his side of the contract and not received the agreed counter-performance in full may sometimes be entitled to restitution in respect of his own performance. Where a contract is avoided for breach, the innocent party is entitled to restitution where there is a claim of total failure of consideration. A complete failure of consideration in a contract occurs where one of the contracting parties fails to receive the benefits of valuable consideration which springs from the roots, and is the essence, of the contract."
EXPLANATION / SCOPE
Innocent party rescinding for serious breach may obtain restitution. Rescission de futuro: Innocent party elects to end contract prospectively due to other party’s serious breach. Restitutionary remedies: Party who performed (wholly or partly) without receiving agreed counter-performance may obtain restitution of their performance. Total failure of consideration: Entitles restitution when innocent party received none of the essential contractual benefits. “Restitution in respect of own performance” means: recovering value of what was given, restoring pre-contract position, and preventing unjust enrichment. “Total failure of consideration” means: party failed to receive essential contractual benefits—those “springing from roots and essence of contract.” Not partial failure but complete failure of core consideration. This serves: preventing unjust enrichment after breach, restoring status quo ante, and compensating innocent party’s performance when counter-performance fails. Example: seller delivers property but buyer refuses to pay—total failure of consideration entitles seller to restitution (return of property or its value). Requirements: (1) Serious breach justifying rescission; (2) Innocent party performed; (3) No receipt of essential counter-performance; (4) Total (not partial) failure of consideration. This remedy: supplements damages, allows alternative relief, and focuses on restoration rather than expectation. The principle recognizes restitutionary relief as available alternative to damages when contract rescinded for serious breach with total consideration failure