Restitution Damages & Specific Damages

What are Restitution Damages?

Damages awarded to one party when the other has been unjustly enriched at the plaintiff's expense.

What is the Goal of Restitution Damages

To prevent unjust enrichment by compensating one party for any benefit conferred on and retained by the other party. Trying to get the consideration to be restored

What are Restitution Damages Available

1. They can be sought as an alternative to expectation damages in cases of total breach or repudiation.

2. Where the contract is void but is needed to restore the consideration (Connect this with defenses).

3. When the restitution is available for the breaching party.

4. When there are unjust enrichment actions.

What are the Limits on Recovery of Restitution Damages of the party to recover restitution damages?

Rule:

1. The injured party may seek restitution damages only if there has been a total breach or repudiation by the other party.

2. The injured party has no right to restitution if 1) he has performed all of his duties under the K and 2) has no performance by the other party other than payment of a definite sum of money for that performance.

Restitution Damages are not available for partial or substantial performance.

How do you measure restitution damages?

Restitution damages are measured by:

1. Market price of a substitute transaction (what it would have cost Defendant to obtain it from someone else) OR

2. The amount by which Defendant’s property has increased in value from the benefit

The choice of measures is subject to the courts discretion.

Coastal Steel v. Algernon Blair

A case illustrating restitution as a remedy for breach and the market value restitution measure of damages.

Value of Benefit Conferred by Breaching Party

Must exceed the harm caused by the breach to recover restitution.

What is the Traditional Rule for allowing a breaching party to recover restitution damages?

A breaching party cannot recover for the value of its part performance.

Modern Rule for Breaching Party to recover restitution damages?

Allows a breaching party to recover for the value of any benefit conferred in excess of harm to the other party.

What Specific Performance

• An equitable remedy (not money damages)

• Ordinarily takes the form of an order compelling a party to perform i.e and injunction

• It is giving the injured party the benefit of the bargain

  • Because the court has to supervise the execution of specific performance, it is up to the courts discretion to impose this.

What is the Overarching Rule for Specific Performance

Courts may order that a breaching party specifically perform the promises of a contract if:

• Money damages are inadequate to compensate the plaintiff.

  • SP or an injunction will not be ordered if damages would be adequate to protect the expectation interests of the injured party.

• The terms of the K are certain and definite: SP will not be granted unless the K terms are sufficiently certain to provide a basis for an inappropriate order; if the terms are not sufficiently definite for the court to create a SP order that they are comfortable with then it is not an available remedy.

• It is feasible for the court to supervise the performance: A promise will not be specifically enforced if teh character and the magnitude of the performance would impose disproportionate burdens on enforcement or supervision.

What are 3 Factors for Inadequate Money Damages?

• The difficulty of proving damages with reasonable certainty.

• Difficulty in obtaining suitable substitute performance.

• Likelihood that the injured party could not collect the damages award.

Personal Services Contracts and Specific Performance

Will not be specifically enforced due to potential forced servitude.

What is the rule for specific performance on Personal Services Contracts?

Rule: A promise to render personal services will not be specifically enforced.

What is the rule for when restitution damages are available as an alternative for expectation damages.

Rule: Restitution for the nonbreaching party can seek restitution as an alternative to expectation damages for a total breach or upon a repudiation, the injured party is entitled to restitution for any benefit that he as conferred by way of part of the breach.

Rationale for electing restitution instead of expectation damages: You cannot recover expectation damages for a losing K and the injured party’s recover of reliance damages can be reduced by the amount of losses the breaching party can prove with reasonable certainty.

When is restitution available for the breaching party?

Formula: Restitution = Value of the Benefit conferred (-) the Harm caused by the breach.

The breaching party can only recover the value of the benefit they gave, minus any harm they caused by breaching.

The breaching party may seek 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.

Always use the lesser of the two measures to calculate the benefit (there is no court discretion)

Is a negative injunction prohibitory injunction barring performance for a new employer permitted?

a promise to render personal services exclusively for one employer will not be enforced by an injunction aginst serving another if its probable result will be:

• To compel personal services or

• To leave the employee without reasonable means of making a living.