completed machine would almost certainly be less than half that of a completed machine of the same kind. How s1(3) operates has been the subject of a detailed and critical analysis by Robert Goff J in the case of BP Exploration Co Ltd v Hunt (No 2), the defendant was granted a concession to explore for oil in Libya. He did not have the physical resources to carry out the exploration himself, so he sold a half share in the concession to BP, on condition that they would bear the initial cost of exploration. Accordingly, under this arrangement, BP’s expenses at the outset were likely to be very substantial, but on the assumption that oil was discovered, that expenditure would be recouped as oil continued to come on stream. The nature of the contract was that should oil not be discovered, the risk would be borne by BP, but, on the assumption that oil was discovered, BP’s expenses would be paid for out of the defendant’s receipts. Oil was discovered in 1967, but in 1971, the Libyan Government expropriated BP’s share of the concession and, in 1973, the defendant’s share was also expropriated. Accordingly, BP had received some payment, but this went only so far as to cover two-thirds of their initial expenditure. On the other hand, since the defendant had no expenses, all moneys received by him amounted to profit once the concession had been paid for. Goff J adopted a two stage approach to s1(3), stating that it was necessary first to identify and value what benefit had been conferred on the defendant, since on the wording of s1(3), this set a ceiling on the amount which could be awarded by way of a just sum. Secondly, it was necessary to award a just sum, taking account of the value of the benefit conferred and the cost to the performer of the work he had done prior to the frustrating event. For these purposes, the benefit to the defendant will be assessed by reference to the end product of the service provided by the other party: BP Exploration Co Ltd v Hunt (No 2) [1979] 1 WLR 783, p 799

doi:10.4324/9781843141518-158

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completed machine would almost certainly be less than half that of a completed machine of the same kind. How s1(3) operates has been the subject of a detailed and critical analysis by Robert Goff J in the case of BP Exploration Co Ltd v Hunt (No 2), the defendant was granted a concession to explore for oil in Libya. He did not have the physical resources to carry out the exploration himself, so he sold a half share in the concession to BP, on condition that they would bear the initial cost of exploration. Accordingly, under this arrangement, BP’s expenses at the outset were likely to be very substantial, but on the assumption that oil was discovered, that expenditure would be recouped as oil continued to come on stream. The nature of the contract was that should oil not be discovered, the risk would be borne by BP, but, on the assumption that oil was discovered, BP’s expenses would be paid for out of the defendant’s receipts. Oil was discovered in 1967, but in 1971, the Libyan Government expropriated BP’s share of the concession and, in 1973, the defendant’s share was also expropriated. Accordingly, BP had received some payment, but this went only so far as to cover two-thirds of their initial expenditure. On the other hand, since the defendant had no expenses, all moneys received by him amounted to profit once the concession had been paid for. Goff J adopted a two stage approach to s1(3), stating that it was necessary first to identify and value what benefit had been conferred on the defendant, since on the wording of s1(3), this set a ceiling on the amount which could be awarded by way of a just sum. Secondly, it was necessary to award a just sum, taking account of the value of the benefit conferred and the cost to the performer of the work he had done prior to the frustrating event. For these purposes, the benefit to the defendant will be assessed by reference to the end product of the service provided by the other party: BP Exploration Co Ltd v Hunt (No 2) [1979] 1 WLR 783, p 799

DOI link for completed machine would almost certainly be less than half that of a completed machine of the same kind. How s1(3) operates has been the subject of a detailed and critical analysis by Robert Goff J in the case of BP Exploration Co Ltd v Hunt (No 2), the defendant was granted a concession to explore for oil in Libya. He did not have the physical resources to carry out the exploration himself, so he sold a half share in the concession to BP, on condition that they would bear the initial cost of exploration. Accordingly, under this arrangement, BP’s expenses at the outset were likely to be very substantial, but on the assumption that oil was discovered, that expenditure would be recouped as oil continued to come on stream. The nature of the contract was that should oil not be discovered, the risk would be borne by BP, but, on the assumption that oil was discovered, BP’s expenses would be paid for out of the defendant’s receipts. Oil was discovered in 1967, but in 1971, the Libyan Government expropriated BP’s share of the concession and, in 1973, the defendant’s share was also expropriated. Accordingly, BP had received some payment, but this went only so far as to cover two-thirds of their initial expenditure. On the other hand, since the defendant had no expenses, all moneys received by him amounted to profit once the concession had been paid for. Goff J adopted a two stage approach to s1(3), stating that it was necessary first to identify and value what benefit had been conferred on the defendant, since on the wording of s1(3), this set a ceiling on the amount which could be awarded by way of a just sum. Secondly, it was necessary to award a just sum, taking account of the value of the benefit conferred and the cost to the performer of the work he had done prior to the frustrating event. For these purposes, the benefit to the defendant will be assessed by reference to the end product of the service provided by the other party: BP Exploration Co Ltd v Hunt (No 2) [1979] 1 WLR 783, p 799

completed machine would almost certainly be less than half that of a completed machine of the same kind. How s1(3) operates has been the subject of a detailed and critical analysis by Robert Goff J in the case of BP Exploration Co Ltd v Hunt (No 2), the defendant was granted a concession to explore for oil in Libya. He did not have the physical resources to carry out the exploration himself, so he sold a half share in the concession to BP, on condition that they would bear the initial cost of exploration. Accordingly, under this arrangement, BP’s expenses at the outset were likely to be very substantial, but on the assumption that oil was discovered, that expenditure would be recouped as oil continued to come on stream. The nature of the contract was that should oil not be discovered, the risk would be borne by BP, but, on the assumption that oil was discovered, BP’s expenses would be paid for out of the defendant’s receipts. Oil was discovered in 1967, but in 1971, the Libyan Government expropriated BP’s share of the concession and, in 1973, the defendant’s share was also expropriated. Accordingly, BP had received some payment, but this went only so far as to cover two-thirds of their initial expenditure. On the other hand, since the defendant had no expenses, all moneys received by him amounted to profit once the concession had been paid for. Goff J adopted a two stage approach to s1(3), stating that it was necessary first to identify and value what benefit had been conferred on the defendant, since on the wording of s1(3), this set a ceiling on the amount which could be awarded by way of a just sum. Secondly, it was necessary to award a just sum, taking account of the value of the benefit conferred and the cost to the performer of the work he had done prior to the frustrating event. For these purposes, the benefit to the defendant will be assessed by reference to the end product of the service provided by the other party: BP Exploration Co Ltd v Hunt (No 2) [1979] 1 WLR 783, p 799

ABSTRACT

The principle, which is common to both s 1(2) and (3), and indeed is the fundamental principle underlying the Act itself, is prevention of the unjust enrichment of either party to the contract at the other’s expense. It was submitted by Mr Rokison, on behalf of BP, that the principle common to both subsections was one of restitution for net benefits received, the net benefit being the benefit less an appropriate deduction for expenses incurred by the defendant. This is broadly correct so far as s 1(2) is concerned; but, under s 1(3), the net benefit of the defendant simply provides an upper limit to the award – it does not measure the amount of the award to be made to the plaintiff. This is because, in s 1(3), a distinction is drawn between the plaintiff’s performance

under the contract and the benefit which the defendant has obtained by reason of that performance – and the net benefit obtained by the defendant from the plaintiff’s performance may be more than a just sum payable in respect of such performance, in which event a sum equal to the defendant’s net benefit would not be an appropriate sum to award to the plaintiff.