Contracts II

Restitution Damages


Restitution damages attempt to put the aggrieved parties into position that they were in before the contract was entered into.

Restitution

Restitution is an obligation imposed by law on ground of justice and equity. Its purpose is to prevent unjust enrichment. Unlike express contracts or contracts implied in fact, restitution does not rest upon the assent of the contracting parties.

Restitution is also known as "quantum meruit," "quasi-contract," and "implied in law contract."

Officious Intermeddler Doctrine

The "officious intermeddler doctrine" holds that where a person performs labor for another without the latter's request or implied consent, however beneficial such labor may be, he cannot recover therefor.

An exception is that of emergency aid, where the service is needed to prevent the others' bodily harm and the helper is a doctor and therefor doesn't give the implication of gratuitousness.

Restatement Third of Restitution § 1

Restitution and Unjust Enrichment

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A person who is unjustly enriched at the expense of another is subject to liability in restitution.

Restatement Third of Restitution § 2

Limiting Principles

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  1. The fact that a recipient has obtained a benefit without paying for it does not of itself establish that the recipient has been unjustly enriched.
  2. A valid contract defines the obligations of the parties as to matters within its scope, displacing to that extent any inquiry into unjust enrichment.
  3. There is no liability in restitution for an unrequested benefit voluntarily conferred, unless the circumstances of the transaction justify the claimant's intervention in the absence of contract.
  4. Liability in restitution may not subject an innocent recipient to a forced exchange: in other words, an obligation to pay for a benefit that the recipient should have been free to refuse.
Restatement Second of Contracts § 272

Relief Including Restitution

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  1. In any case governed by the rules stated in this Chapter, either party may have a claim for relief including restitution under the rules stated in [R2C § 240] and [R2C § 377].
  2. In any case governed by the rules stated in this Chapter, if those rules together with the rules stated in Chapter 16 will not avoid injustice, the court may grant relief on such terms as justice requires including protection of the parties' reliance interests.
Restatement Second of Contracts § 374

Restitution in Favor of Party in Breach

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  1. Subject to the rule stated in Subsection (2), if a party justifiably refuses to perform on the ground that his remaining duties of performance have been discharged by the other party's breach, the party in breach is entitled to restitution for any benefit that he has conferred by way of part performance or reliance in excess of the loss that he has caused by his own breach.
  2. To the extent that, under the manifested assent of the parties, a party's performance is to be retained in the case of breach, that party is not entitled to restitution if the value of the performance as liquidated damages is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss.
Restatement Second of Contracts § 373

Restitution When Other Party Is in Breach

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  1. Subject to the rule stated in Subsection (2), on a breach by non-performance that gives rise to a claim for damages for total breach or on a repudiation, the injured party is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance.
  2. The injured party has no right to restitution if he has performed all of his duties under the contract and no performance by the other party remains due other than payment of a definite sum of money for that performance.
Restatement Second of Contracts § 371

Damages Based on Reliance Interest

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If a sum of money is awarded to protect a party's restitution interest, it may as justice requires be measured by either

  1. the reasonable value to the other party of what he received in terms of what it would have cost him to obtain it from a person in the claimant's position, or
  2. the extent to which the other party's property has been increased in value or his other interests advanced.