Key Takeaways

  • Restitution damages focus on the defendant’s gain rather than the plaintiff’s loss.
  • They aim to prevent unjust enrichment and restore the non-breaching party to their original position.
  • These remedies are used in contract, tort, and criminal law contexts.
  • Plaintiffs cannot claim restitution for lost profits and must clearly include such claims in their initial complaint.
  • Courts may limit restitution awards where calculation is uncertain or capped by jurisdiction.

A restitution remedy is basically a solution that affords some form of award that a plaintiff needs to recover from damages done by a defendant. Such a remedy is calculated on the gains of a defendant instead of the losses of the plaintiff. Restitution essentially mandates that a defendant forfeit all gains that have unlawfully placed the plaintiff at a disadvantage. When it comes to contract law, restitution is the most often used. Restitution in an agreement is designed to restore an injured party, or a party who underwent damages in some form, to a previous position before the contract was entered.

Parties that desire restitution cannot seek lost earnings and profits stemming from the breach. To get a proper resolution, a plaintiff should include such a claim in an initial complaint. Further, restitution does not have to be awarded if an amount cannot be calculated with absolute clarity. Restitution is usually awarded for two reasons:

  1. To give proper compensation to a victim while restoring finances to an offended party
  2. To prevent the unjust enrichment of a defendant and stop them from retaining gains that are unlawful

Restitution usually applies when a person has benefited at the expense of another and the offending party makes some sort of gain over the other.

For contract lawsuits, the non-breaching party may cancel the agreement and usher in a lawsuit for restitution if a non-breaching party has been bestowed a benefit to the breaching party to the detriment of another party. Criminal cases apply if a defendant must pay the hospital bills of a victim of criminal battery; otherwise known as criminal restitution. Other remedies stemming from gains are awarded in cases where a defendant has ushered in profits from wrongdoing of some kind.

Plaintiffs usually desire restitution when agreements are voided by a judge due to incapacity or incompetence of the defendant. The law also allows incapacitated people to disavow contract duties but usually only if a plaintiff is in a worse position.

The usual rule is that payment of money under mistakes could be recovered if such payments will prejudice a payee. Moreover, it is also considered an unjustified enrichment to allow recipients to keep money due to a mistake. To create a strong restitution claim, you must demonstrate if the defendant had gained from an agreement.

Key Differences

The key differences between compensation and restitution are based on how the monetary awards are calculated. When it comes to restitution, the award is based on how much a defendant was rewarded from a violation. Compensation is based on how much a plaintiff received when it comes to finances. In certain cases, a judge will allow a plaintiff to choose between compensation and restitution. For instance, restitution awards may stem from a higher payoff to a plaintiff than a compensated amount. The plaintiff could then be permitted to pick the higher award. Such a choice might not be available in every case.

Types of Restitution Damages

Restitution damages can take several forms depending on the nature of the dispute:

  • Monetary Restitution: The court orders the defendant to pay back the value of the benefit they unjustly received.
  • Specific Restitution: This involves returning a specific item or property to the plaintiff, such as a piece of land or a valuable item wrongfully obtained.
  • Quantum Meruit: If a party has performed services but no agreed price exists, the court may award a reasonable value for the services provided.
  • Constructive Trust: In some equity cases, courts impose a constructive trust, requiring the defendant to hold the gain (such as money or property) in trust for the plaintiff.
  • Equitable Lien: A remedy where the court grants a security interest in the defendant’s property to the plaintiff for the value unjustly held.

These variations allow courts to adapt restitution damages to a wide range of factual scenarios.

Restitution in the Court System

Moreover, resolution is usually invoked in contract breach cases. This occurs when a party has violated an agreement and is ordered to issue restitution. The amount is based on how much the offending party gained from the contract violation, and is also based on the amount stated within the contract terms. Judges encounter this common scenario and restitution is usually granted. Moreover, restitution is a common award in personal injury cases. Restitution would be issued instead of compensation and could be ordered in a personal injury case. The amount would only cover an out-of-pocket expense in some form, and does not cover emotional distress.

In addition, restitution is also found in criminal cases. For instance, the judge could order a criminal defendant to pay a victim restitution in instead of a fine. The difference between restitution and criminal fine is that the fines would be paid to the government, and the restitution would go to the victim. 

However, there are instances where restitution awards have limits. They are usually not granted in every case, especially if an amount cannot be adequately calculated. Certain jurisdictions may also issue caps on the amount of restitution, but this would depend on the violation at hand. The actual definition of restitution also depends on the state or county in which you live.

When Restitution Damages Are Awarded

Courts may grant restitution damages in several contexts, particularly when:

  • Contracts are breached and the non-breaching party conferred a benefit on the breaching party, such as partial payment or services.
  • Contracts are rescinded, especially due to fraud, duress, incapacity, or mutual mistake.
  • Unjust enrichment occurs, where one party unfairly benefits at another’s expense, even in the absence of a formal contract.
  • Tortious conduct results in gain to the wrongdoer, such as the misappropriation of property or misuse of confidential information.

Restitution is not meant to punish the defendant but to reverse wrongful enrichment and reestablish fairness between parties.

Limits and Considerations for Restitution Claims

While restitution damages serve a vital role, they are subject to legal limitations:

  • Certainty Requirement: Courts may deny restitution if the benefit’s value cannot be calculated with reasonable certainty.
  • Causation and Traceability: Plaintiffs must demonstrate a direct link between their loss and the defendant’s gain.
  • No Double Recovery: A plaintiff cannot recover both expectation damages and restitution for the same conduct.
  • Equitable Defenses: Defendants may raise defenses such as laches, estoppel, or unclean hands to block restitution.

Additionally, courts may weigh policy considerations—such as incentivizing fair dealing or discouraging opportunistic breaches—when deciding to award restitution damages.

Frequently Asked Questions

  1. What are restitution damages in contract law?
    Restitution damages in contract law aim to prevent one party from unjustly benefiting at another’s expense by returning the value of any benefit conferred.
  2. How are restitution damages different from compensatory damages?
    Restitution damages are based on the defendant’s gain, while compensatory damages focus on the plaintiff’s loss.
  3. Can I claim restitution without a contract?
    Yes. Restitution may be awarded in quasi-contract or unjust enrichment claims, even without a formal agreement.
  4. What limits restitution damages from being awarded?
    They may be denied if the benefit's value is uncertain, if equitable defenses apply, or if it would result in a double recovery.
  5. Are restitution damages available in tort and criminal cases?
    Yes. Restitution can be awarded in tort (e.g., misappropriation) and criminal cases (e.g., requiring payment to victims instead of fines to the state).

To learn more about a restitution remedy, you can post your job on UpCounsel’s website. UpCounsel’s lawyers have graduated from some of the best law schools in the nation and will provide more information on your rights, should you need compensation or restitution of any kind. Moreover, they will defend your rights in court so you don’t have to stand on your own in front of a judge.