Failure of Basis Reconsidered: Commercial Certainty and Restitution

Abstract

Failure of basis has become a central organising concept within modern unjust enrichment, yet its application in complex commercial arrangements remains contentious. This article reassesses the doctrine in light of recent judicial developments, focusing on its interaction with contractual risk allocation and commercial certainty. It analyses cases involving partial performance, conditional transfers, and long-term contractual relationships, questioning whether courts have consistently distinguished between contractual disappointment and restitutionary injustice. The article argues that an overly expansive understanding of failure of basis risks undermining the stability of contractual bargains, while an excessively narrow approach may permit unjust retention of benefits. By examining comparative approaches and the underlying normative justifications for restitution, the article proposes a refined conception of failure of basis that respects commercial expectations while preserving restitution’s corrective function. The analysis contributes to broader debates about the boundary between contract and unjust enrichment and offers guidance for future judicial reasoning in commercial restitution cases.