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What is restitution?

🤔 Contracts • Remedies for Unexcused Non-Performance K#170

Legal Definition

Restitution tries to prevent unjust enrichment. Where a contract is unenforceable, a party may choose to seek restitution in quasi-contract, which is measured by the benefit received by the defendant. If it is too difficult or unfair to measure the benefits, then it is measured by the detriment to the plaintiff.

Plain English Explanation

Imagine you buy a pair of shoes from Amazon. You're excited to get some fresh Yeezys, even though you had to pay $400 for them. Here, you have a basic contract between you and Amazon. In exchange for your $400, Amazon has agreed to send you a pair of Yeezys. On the day your box arrives, you realize it's a bit bigger than you expected. When you open the box, you see two boxes of shoes inside. Due to an error at Amazon, they accidentally gave you $800 worth of shoes for only $400.

What's weird about this situation is that you and Amazon are in a sort of grey area of contract law. The original contract between you and Amazon has concluded, and there is no remaining performances obligated from Amazon or from you. After all, you paid them money, and they gave you your shoes. The issue here is they gave you an extra pair on accident, and there's no contract in place to tell a court how to deal with it.

Thus, in this situation, since no breach has occurred, the damages Amazon will seek are called restitution. Restitution will seek to make things fair, because you have been unjustly enriched with a second pair of shoes you didn't pay for, which means you'll need to pay for the extra pair of shoes (unless you opt to return them).

Note: Students commonly hear this example and think, "Wait, isn't there a law that says if I get stuff in the mail I didn't order or request, I can keep it for free?" The answer is: sort of. There is a federal law that has to do with not paying for unordered stuff you receive in the mail, but it applies to extremely narrow circumstances that aren't applicable in this example (or in most modern scenarios where a buyer has a preexisting relationship with the seller).

Visual Aids

What is restitution?
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