BP Exploration Co (Libya) Ltd v Hunt (No 2)

Under the Law Reform (Frustrated Contracts) Act 1943, the court can award a just sum for a valuable benefit conferred before frustration, assessed by reference to the end product of the claimant's performance.

Citation
[1979] 1 WLR 783
Court
Queen's Bench Division
Year
1979
Subject
Restitution and Unjust Enrichment
Topic
Mistake, failure of basis, duress and services

Facts

Mr Hunt held a concession to explore for oil in Libya, and entered into an agreement with BP under which BP was to carry out the exploration and development work, at its own expense, in return for a half share in the concession and reimbursement of its expenses out of Mr Hunt's share of the oil. BP discovered a large oil field, and oil began to flow, but the Libyan government then expropriated the concession. The contract was frustrated, and BP claimed a just sum under section 1(3) of the 1943 Act for the benefit it had conferred on Mr Hunt.

Legal principle

Robert Goff J awarded BP a just sum. He said that the purpose of the Act was to prevent the unjust enrichment of either party at the expense of the other, and that the court must first identify and value the benefit obtained by the defendant, which was the end product of the claimant's performance, here the oil received by Mr Hunt before the expropriation, rather than the value of the work done. The court must then assess a just sum, not exceeding the value of the benefit, which would generally be the reasonable value of the claimant's performance. The decision was upheld by the Court of Appeal and the House of Lords.

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This summary is for study and revision and is not legal advice. Although our case summaries are checked for accuracy, we do not guarantee that they are free from errors or omissions. Always read the full judgment for the court's reasoning.

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