BP Exploration Co (Libya) v Hunt (No 2) [1983]
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BP Exploration Co (Libya) v Hunt (No 2) [1983] 2 AC 352 is a notable English contract law case that delves into the complexities surrounding unjust enrichment and the frustration of an agreement.
The case revolves around events that transpired in 1957 when Nelson Bunker Hunt secured an oil concession for the Sarir field in Libya. Subsequently, in 1960, he entered into a contract with BP to exploit the oil. The terms of the contract outlined various conditions, including the transfer of half the concession to BP, cash, and oil contributions from BP to Hunt, exploration and development responsibilities on the part of BP, and a profit-sharing arrangement. However, in 1971, amidst political changes in Libya, the government nationalised BP's half share, and two years later, Hunt was also expropriated from his share.
The legal dispute emerged when BP claimed frustration of the contract, seeking a just sum of money under the Law Reform (Frustrated Contracts) Act 1943, Section 1(3). In the High Court, Robert Goff J held that the contract was frustrated in 1971 and awarded BP $35.4 million plus interest. He outlined a two-step process for a Section 1(3) claim, involving the identification of the benefit's value and the assessment of a just sum to prevent unjust enrichment.
The Court of Appeal upheld Goff J's decision, emphasising the complete discretion of judges under the Act to award what they deem fair. Lawton LJ highlighted the lack of assistance from terms such as unjust enrichment not explicitly present in the statute.
In the House of Lords, a more limited appeal on the wording of Section 2(3) was dismissed, confirming the decisions reached in the lower courts. The case illustrates the legal intricacies involved in determining frustration and the subsequent calculation of a just sum under the Law Reform (Frustrated Contracts) Act 1943.
The case revolves around events that transpired in 1957 when Nelson Bunker Hunt secured an oil concession for the Sarir field in Libya. Subsequently, in 1960, he entered into a contract with BP to exploit the oil. The terms of the contract outlined various conditions, including the transfer of half the concession to BP, cash, and oil contributions from BP to Hunt, exploration and development responsibilities on the part of BP, and a profit-sharing arrangement. However, in 1971, amidst political changes in Libya, the government nationalised BP's half share, and two years later, Hunt was also expropriated from his share.
The legal dispute emerged when BP claimed frustration of the contract, seeking a just sum of money under the Law Reform (Frustrated Contracts) Act 1943, Section 1(3). In the High Court, Robert Goff J held that the contract was frustrated in 1971 and awarded BP $35.4 million plus interest. He outlined a two-step process for a Section 1(3) claim, involving the identification of the benefit's value and the assessment of a just sum to prevent unjust enrichment.
The Court of Appeal upheld Goff J's decision, emphasising the complete discretion of judges under the Act to award what they deem fair. Lawton LJ highlighted the lack of assistance from terms such as unjust enrichment not explicitly present in the statute.
In the House of Lords, a more limited appeal on the wording of Section 2(3) was dismissed, confirming the decisions reached in the lower courts. The case illustrates the legal intricacies involved in determining frustration and the subsequent calculation of a just sum under the Law Reform (Frustrated Contracts) Act 1943.
