Restitution in Contract
What is the Restitution in Contract?
Restitution requires the breaching party to return the value of any benefit conferred by the non-breaching party, preventing unjust enrichment even in the absence of an enforceable contract.
Definition
Restitution in the contract context is a remedy designed to prevent unjust enrichment by requiring a party who has received a benefit to return its value. Unlike expectation damages, which protect the promisee's lost bargain, and reliance damages, which restore expenditures, restitution focuses on the benefit received by the defendant. The measure is the value of the benefit conferred, not the cost incurred by the plaintiff in conferring it.
Restitution is available in several contract scenarios. When a contract is breached, the non-breaching party may elect restitution as an alternative to expectation or reliance damages, particularly when the contract price undervalues the benefit conferred. When a contract is unenforceable (for example, due to the Statute of Frauds, incapacity, or illegality), restitution may be the only available remedy to prevent unjust enrichment. Even a breaching party may sometimes recover in restitution for benefits conferred before the breach, minus the damages caused by the breach.
The measure of restitution is typically the reasonable value of the benefit conferred, measured either by the market value of the services or goods provided or by the extent to which the defendant's wealth has been increased. In some cases, a party may choose between the cost of the benefit conferred and the increase in value to the defendant, depending on which better reflects the actual enrichment. Restitution is a flexible remedy rooted in equity, and courts have broad discretion in fashioning the appropriate measure.
Key Elements
- 1A benefit has been conferred on the defendant by the plaintiff
- 2The defendant has knowledge of or appreciation for the benefit
- 3The defendant's retention of the benefit without compensation would be unjust
- 4The plaintiff did not confer the benefit gratuitously or officiously
- 5The value of the benefit is measurable
Landmark Cases
Britton v. Turner
6 N.H. 481 (1834)
Landmark early case allowing a breaching party to recover in restitution for work performed before the breach, minus damages caused to the non-breaching party.
Kearns v. Andree
107 Conn. 181 (1928)
Applied restitution to a contract that was unenforceable under the Statute of Frauds, allowing the party who performed to recover the value of the benefit conferred.
United States v. Algernon Blair, Inc.
479 F.2d 638 (4th Cir. 1973)
Held that a subcontractor could recover the reasonable value of services in restitution even though the contract price would have resulted in a loss, because restitution is measured by benefit conferred, not contract price.
Exam Tips
- Restitution measures the benefit to the defendant, not the cost to the plaintiff—these can differ significantly.
- Remember that even a breaching party may recover in restitution for benefits conferred minus the damages caused by the breach.
- Restitution may be the only available remedy when a contract is void or unenforceable—check for unjust enrichment.
- On an exam, compare restitution with expectation and reliance damages and explain why the plaintiff might prefer one over the others.
Common Mistakes to Avoid
- Confusing the measure of restitution (benefit to the defendant) with the measure of reliance (cost to the plaintiff).
- Assuming that a breaching party can never recover anything—restitution may be available to prevent unjust enrichment even by the non-breaching party.
- Failing to consider restitution as a remedy when the contract is unenforceable but one party has conferred a benefit.
Memory Aid
Restitution = Return the benefit. Focus on what the DEFENDANT received, not what the PLAINTIFF spent.