General Damages for Breach of Contract→ Restitution Measure

Question 1

Resitution Measure

Answer 1

Put the breaching party in the position they would have been in had the contract never been made.

• Attempts to prevent the unjust enrichment of the defendant by returning to a plaintiff who has partially performed the value of the performance he has rendered to the defendant
• Focuses on breaching party –> whereas reliance focuses on paying back the non-breaching party
• Focuses on taking from the breaching party any benefit they unjustly received.
• You should use this when you breached the contract but you mostly performed.

Question 2

Restitution Measure

Restitution damages may be measured by

Answer 2

Restitution damages may be measured by:

• Reasonable value to the other party of what he received, in terms of what it would have cost him to obtain it otherwise, OR
• The extent to which the other party’s property has been increased in value or his other interests advanced

Question 3

Restitution damages are capped by

Answer 3

Restitution damages are capped by the value of the contract

• won’t let party be in better position than they would have been in if contract had been performed

Question 4

Quantum Meruit

Answer 4

• Cause of action that allows breaching party to recover restitution damages conferred upon non-breaching party
  
  • Allows recovery outside of contract damages
• Rule: Party may recover reasonable value of services rendered in partial performance of contract, after paying damages suffered by non-breaching party
• Non-breaching party doesn’t have to pay for house that isn’t built according to contract because it can turn it down
• But in the context of employment, the employer receives value day by day from the employee, so the employer should have to pay for that value received

Question 5

Quantum meruit

Policy rationale

Answer 5

Policy rationale:

• Want to reward people for partially performing contract rather than blowing the whole thing off
• if this was not allowed, party who didn’t perform at all would be in better shape than party who attempting to perform and didn’t complete job

Question 6

In order to recover for quantum meruit,

breaching party must show:

Answer 6

In order to recover for quantum meruit, breaching party must show:

1. Breach was not willful –> “good faith”
2. Non-breaching party was unjustly enriched

• Rule: Party is unjustly enriched when the benefit conferred is greater than the actual damages suffered
• Breaching party has burden of proof for unjust enrichment
• Seller’s damages are measured at the time of the breach

Question 7

Restitution Damages

Quantum Meruit

Liquidated Damages Clauses

Answer 7

Liquidated damages clause may bar recovery under quantum meruit, so long as the value of the LDC is reasonable in light of the anticipated or actual loss caused by the breach

Question 8

Restitution damages are might be awarded when

Answer 8

Restitution damages are sometimes awarded when:

• a contract is discharged for various reasons (i.e. impossibility).
• Where P has partially performed the K
• in losing contracts, where expectancy damages would not help much
• where expectation damages are too uncertain to be awarded and reliance damages would not adequately compensate the plaintiff.

Question 9

What type of Damages are typically awarded in

“quasi contract” suits?

Answer 9

Restitution and reliance damages are frequently awarded in so called “quasi contract” suits.

Question 10

Quasi contract suits are __________.

Answer 10

These are suits where recovery “on the contract” is unavailable. There are two common quasi-contract scenarios:

• Contract is unenforceable: Quasi-contract is available where a contract is (or later becomes) unenforceable or voidable
  
  • Examples: (1) A contract that violates the statute of frauds, but that is partly performed; (2) a contract that is discharged for impossibility.
• Recovery by breaching plaintiff: Quasi-contract is available where a plaintiff who has committed a “material breach” (i.e., a plaintiff who has not substantially performed), has nonetheless performed enough to render some value to the defendant. The suit is sometimes said to be in “quantum meruit.”
  
  • Example: A contractor who only partially completed work on the construction of a building may recover for the value of the partial construction.

Question 11

When do you have a suit on quasi-contract?

Answer 11

• The contract is unenforceably vague
• The contract is illegal
• The parties are discharged from the contract because of impossibility, impracticability, or frustration of purpose, and
• The plaintiff has himself materially breached the contract

Question 12

Restitution Measure

Implied in Fact Contracts

Answer 12

Rule: Agreement where intent to contract can be inferred from the intent of the parties as evidenced by their actions

• Look at circumstances and the “ordinary course of dealing”
• Need indications of plaintiff’s expectation of payment and defendant’s expectation to pay
• Party who volunteers information exhibits no intention to be paid

Question 13

Resitution Measure

Implied in Law Contracts

Answer 13

Rule: Implies a contract when the law suggests that it is just to make compensation availableà form of recovering restitution apart from contract damages

• EX: Cotnam v. Wisdom –> Doctors help man knocked unconscious when thrown from trainà contract is implied and doctors should receive compensation for their services, regardless of whether it helped or not

Policy rationale: Law wants to encourage people to do things that are for the good of societyà most often enforced in emergency situations

• Measure of damages is the reasonable compensation for the services rendered

NOTE: Wholly created legal fiction, invented and used for the sake of remedy