Third parties have previously raised complications for both the law of contract1 and, indirectly, the law of tort.2 A lengthy debate has raged as to whether such individuals can acquire rights under arrangements to which they are not privy. The law now faces the rather different, but equally difficult question as to whether (and if so, when) third parties can incur liabilities to pay for gains obtained where such contracts are performed. The question is addressed directly to the law of restitution and has recently received a decidedly limited reply from the House of Lords in The Trident Beauty.3

In 1991, Pan Ocean chartered a vessel from the Trident Shipping Co. Ltd., hire being payable 15 days in advance. One of these advances was (at Trident’s request) made to a third party, Creditcorp Ltd., to which Trident had assigned its rights to hire by way of security for a loan. In the event, the charterparty was not performed and the ship stood idle in Singapore for the whole period in respect of which the advance in question had been made. Pan validly terminated the charter and then sought to recover the advance from Creditcorp on the ground that the consideration for it had totally failed. The House of Lords, affirming the decision of the Court of Appeal,4 unanimously rejected the claim. There was no direct authority on the point,5 but Pan was to be limited to its (nugatory) contractual remedies6