Restitution

The law of restitution is the law of gains-based recovery, in which a court orders the defendant to give up his gains to the claimant. It should be contrasted with the law of compensation, the law of loss-based recovery, in which a court orders the defendant to pay the claimant for their loss.

American Jurisprudence 2d edition notes:

The word "restitution" was used in the earlier common law to denote the return or restoration of a specific thing or condition. In modern legal usage, its meaning has frequently been extended to include not only the restoration or giving back of something to its rightful owner and returning to the status quo but also compensation, reimbursement, indemnification, or reparation for benefits derived from, or for loss or injury caused to, another. In summary, therefore, the word "restitution" means the relinquishment of a benefit or the return of money or other property obtained through an improper means to the person from whom the property was taken.[1]

Restitution may be either a legal remedy or an equitable remedy, "depend[ing] upon the basis for the plaintiff's claim and the nature of the underlying remedies sought".[1] Generally, restitution and Equitable tracing is an equitable remedy when the money or property wrongfully in the possession of defendant is traceable (i.e., can be tied to "particular funds or property"). In such a case, restitution comes in the form of a constructive trust or equitable lien.[1]

Where the particular property at issue cannot be particularly identified, restitution is a legal remedy. This occurs, for example, when the plaintiff "seeks a judgment imposing personal liability to pay a sum of money".[1] Unjust enrichment and quantum meruit are sometimes identified as types of a disgorgement legal remedies.[1]

This type of damages restores the benefit conferred to the non-breaching party. Put simply, the plaintiff will get the value of whatever was conferred to the defendant when there was a contract. There are two general limits to recovery, which is that a complete breach of contract is needed, and the damages will be capped at the contract price if the restitution damages exceed it.

The orthodox view suggests that there is only one principle on which the law of restitution is dependent, namely the principle of unjust enrichment.[2][3] However, the view that restitution, like other legal responses, can be triggered by any one of a variety of causative events is increasingly prevalent. These are events in the real world which trigger a legal response. It is beyond doubt that unjust enrichment and wrongs can trigger an obligation to make restitution. Certain commentators propose that there is a third basis for restitution, namely the vindication of property rights with which the defendant has interfered.[4] It is arguable that other types of causative event can also trigger an obligation to make restitution.