Restitution in Contracts: Preventing Unjust Enrichment
What Is Restitution?
Restitution is a legal remedy that requires a party who has been unjustly enriched to return the benefit they received — or its monetary equivalent — to the party who provided it. Unlike expectation damages, restitution does not focus on lost profits; it focuses on giving back what was unfairly kept.
How Restitution Differs from Other Remedies
- Expectation damages look forward — what would you have gained?
- Reliance damages look backward — what did you spend?
- Restitution looks at the other party — what did they gain at your expense?
Restitution is particularly useful when a contract is invalid or unenforceable, because the other remedies typically require a valid contract.
When Courts Order Restitution
- Void or unenforceable contracts — When a contract cannot be enforced, restitution ensures neither party keeps benefits they did not pay for.
- Breaching party conferred a benefit — Even the party that breached may recover restitution for benefits they provided before the breach, minus damages caused by the breach.
- Quasi-contract / unjust enrichment — When there is no formal contract but one party conferred a benefit on another under circumstances where keeping it would be unjust.
- Rescission — When a contract is unwound, restitution is the mechanism for returning what was exchanged.
Measuring Restitution
Courts may measure the benefit in two ways:
- Cost avoided — What it would have cost the enriched party to obtain the benefit elsewhere.
- Market value — The fair market value of the goods, services, or property received.
Limitations
Restitution is generally not available when a valid, enforceable contract governs the parties' relationship and provides an adequate remedy. Courts will not use restitution to rewrite a bad deal.
When to Consult a Lawyer
If you provided value under a contract that has fallen apart — whether through breach, invalidity, or rescission — consider consulting an attorney to evaluate whether restitution is an available remedy in your situation.
This article is for informational purposes only and does not constitute legal advice. Consult a licensed attorney for guidance specific to your situation.