Restitution damages contract law deals with the legal remedy of restitution, whereby an injured party is compensated or "made whole" for a loss, damage, or injury he has suffered.

What Is Restitution?

Restitution is sometimes referred to as restitutionary damages. It is a type of solution that is available in both civil and criminal legal cases.

Restitution is often calculated by evaluating the gains of the defendant. The defendant is required to give up any gains they obtained illegally to the plaintiff. The goal is to put the injured party back in the same position they were in before suffering the damages at the fault of the defendant.

Awarding Restitution

The plaintiff is not eligible for restitution if their damages suffered cannot be calculated accurately. Restitution is often awarded to revert the victim to the same position they were in pre-damages or to avoid the unjust party from receiving any beneficial yet illegal gains.

Restitution is often used in the following legal situations:

  • When a contract is deemed to be unenforceable
  • To achieve fairness regarding contract terms
  • In criminal sentencing to make a financial or timely restitution

Calculating Restitution Damages

In order to file for restitution, the damages suffered must be measurable. The exact method of calculation will depend on the legal case and the type of damages:

  • Contract cases: Damages are awarded based on the contract terms. Breach of contract cases can be unenforceable, voidable, and discharged contracts.
  • Personal injury cases: Damages are awarded based on medical bills, damage to personal property, and measurable pain and suffering.
  • Unenforceable terms: Damages are awarded based on the intended benefits received and the financial gains of one party.

Reliance Damages

Reliance damages refer to the damages awarded from an unenforceable promise. Reliance damages aim to put the injured party back in the same position they were in before the unenforceable promise was ever made. These damages are often used when the actual amount of damages cannot be calculated.

When Does Restitution Apply?

Restitution applies when one party benefits from the loss of the other party. The exact outcome of the restitution will depend on the type of legal case.

  • Contract Breach: The contract may be canceled and a legal suit filed for restitution.
  • Criminal cases: A defendant may be required to restitute financial or civil responsibilities for damages that they have caused.

What Is the Difference Between Restitution and Compensation?

Restitution and compensation are not always the same concept. The difference is the method in which the award is calculated. In restitution, the damages are calculated based on how much the defendant gained from the process. In most cases, this is an amount used to restore what was lost in a civil lawsuit.

In terms of compensation, the damages are calculated based on how much the plaintiff lost. This is often paid to the victim of a crime. The actual calculation method used will depend on the legal case and the judge's ruling. In some cases, compensation is available to the victim even without the presence of legal charges or a conviction.

In criminal cases, a judge cannot order that both restitution and compensation are owed. However, the differences can be significant, and the judge can allow the victim to choose the type of retribution.

Types of Restitution Cases

The remedy of restitution is available in several types of legal cases.

  • Breach of Contract: This is the most common type of restitution case. It occurs when a party violates a valid contract. Restitution is calculated by the amount gained from the breach.
  • Personal Injury: Restitution can be awarded in personal injury cases to cover any medical expenses, but not for emotional pain and suffering.
  • Criminal: Restitution may be required of the victim instead of legal fines that are paid to the government.

Limits on Restitution Awards

Restitution is not always available as a remedy, and sometimes the restitution amount awarded may be limited. Some of the most common limits are:

  • Restitution cannot be used when the amount of loss cannot be calculated.
  • Restitution is limited to the original amount of the contract unless the defendant received benefit beyond that amount.
  • Restitution maximum amounts can be limited by state and jurisdiction.
  • Restitution may not be available if the contract terms were completed.

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