This chapter focuses on what may be considered, after mistake, as the ‘unjust factor’ of greatest theoretical and practical importance in the law. Notwithstanding its confusing nomenclature, ‘failure of consideration’ concerns cases where a plaintiff has conferred a benefit on the defendant ‘conditionally on a performance or event that has not materialised’. It may therefore be better understood as ‘failure of condition’, to avoid any contractual mis-association. Unlike mistake, this unjust factor is concerned with conditional rather than vitiated intention, and the relevant condition is assessed objectively on a bilateral basis, by looking at the manifested understanding of both parties. The chapter explains that, once understood as involving the failure of the condition on which a benefit is transferred, the law’s requirement that the failure is ‘total’ is more readily understood and justified. It explores the operation of this unjust factor in a variety of contractual and pre-contractual contexts and the critical importance of close characterisation of the objective condition on which the benefit was transferred, as well as separating out the unjust factor enquiry from the measure of enrichment. In all cases, the contractual context may well shape the defendant’s liability, but it will do so because the law of unjust enrichment moderates restitutionary liability in a way that captures the nuance of that broader legal context. This is of particular importance when considering the vexed question of ‘contract ceilings’ in the context of contracts terminated for breach, but also supports recognition of liability for failure of condition in cases of services, and in cases where the failed condition is an event other than promised performance. The chapter concludes by assessing whether an unjust factor of ‘free acceptance’ can be supported as a matter of precedent, principle or policy.
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