Remedies: Restitution

Question 1

What is “restitution”?

Answer 1

• Not a part of contract law, but a distinct concept

- based on preventing “unjust enrichment” when one has conferred a benefit on another

Question 2

In general, under what circumstances can “restitution” be sought?

Answer 2

• when contract exists and has been breached;
• when K is unenforceable
• in some cases, when no contractual relationship exists at all between the parties

Question 3

In general, what is the measure of damages for “restitution”?

Answer 3

In general –> value of benefit conferred to defendant

EXCEPTION –> if benefit to D is difficult to ascertain or would be unjust, then damages may be detriment suffered by P

Question 4

What is the general situation involving “restitution” where there is breach of K?

Answer 4

• if K is breached and NON-BREACHING party has not fully performed, he may choose to cancel the K and sue for restitution to prevent unjust enrichment

HOWEVER –> if Plaintiff HAS fully performed, he is limited to his damages under the K (this may be less than he would have received in restitution, bc restitution is not limited to K price)

Question 5

May plaintiff recover in “restitution” for breach of K if HE is the one who breached?

Answer 5

Some courts –> won’t allow

Modern courts –> will allow restitution, but will limit recovery to the contract price less damages resulting from breach

Question 6

What is the rule if Buyer pays part of purchase price in advance and then breaches?

Answer 6

Usually, he can recover some of the payments.

Unless Seller can prove greater damages —> Seller can keep advance payments totaling 20% of purchase price, or $500, whichever is less. The balance must be returned to buyer.

If there is a liquidated damages clause –> seller need refund only excess of buyer’s payments over amount of liquidated damages

Question 7

What is the rule re: restitution when a contract is unenforceable?

Answer 7

Restitution may be available in quasi-contract action when a contract was made but is unenforceable and unjust enrichment would otherwise result

Example –> celebrity is hired to sign authographs and is paid, but dies before he performs. the other party has action in restitution to recover amounts paid

Question 8

Under what circumstances is restitution available when there is no contract?

Answer 8

Restitution may be available in quasi-contract action even if there is NO contractual relationship between the parties IF:

1. P has CONFERRED A BENEFIT on def;
2. with REASONABLE EXPECTATION of being compensated for its value;
3. d KNEW OR HAD REASON TO KNOW of this expectation;
4. D would be UNJUSTLY ENRICHED if he were allowed to retain benefit without compensating P