Restatement (3d) Restitution 36, 38 and 39

Restatement (Third) of the Law of Restitution and Unjust Enrichment

36 Restitution to a Party in Default

(1) A performing party whose material breach prevents a recovery on the contract has a claim in restitution against the recipient of performance, as necessary to prevent unjust enrichment.

(2) Enrichment from receipt of an incomplete or defective contractual performance is measured by comparison to the recipient's position had the contract been fully performed. The claimant has the burden of establishing the fact and amount of any net benefit conferred.

(3) A claim under this section may be displaced by a valid agreement of the parties establishing their rights and remedies in the event of default.

(4) If the claimant's default involves fraud or other inequitable conduct, restitution may on that account be denied (§ 63).

38 Performance-Based Damages

(1) As an alternative to damages based on the expectation interest (Restatement Second, Contracts § 347), a plaintiff who is entitled to a remedy for material breach or repudiation may recover damages measured by the cost or value of the plaintiff's performance.

(2) Performance-based damages are measured by

(a) uncompensated expenditures made in reasonable reliance on the contract, including expenditures made in preparation for performance or in performance, less any loss the defendant can prove with reasonable certainty the plaintiff would have suffered had the contract been performed (Restatement Second, Contracts § 349); or

(b) the market value of the plaintiff's uncompensated contractual performance, not exceeding the price of such performance as determined by reference to the parties' agreement.

(3) A plaintiff whose damages are measured by the rules of subsection (2) may also recover for any other loss, including incidental or consequential loss, caused by the breach.

39 Profit From Opportunistic Breach

(1) If a deliberate breach of contract results in profit to the defaulting promisor and the available damage remedy affords inadequate protection to the promisee's contractual entitlement, the promisee has a claim to restitution of the profit realized by the promisor as a result of the breach. Restitution by the rule of this section is an alternative to a remedy in damages.

(2) A case in which damages afford inadequate protection to the promisee's contractual entitlement is ordinarily one in which damages will not permit the promisee to acquire a full equivalent to the promised performance in a substitute transaction.

(3) Breach of contract is profitable when it results in gains to the defendant (net of potential liability in damages) greater than the defendant would have realized from performance of the contract. Profits from breach include saved expenditure and consequential gains that the defendant would not have realized but for the breach, as measured by the rules that apply in other cases of disgorgement (§ 51(5)).