The law of restitution is the law of gains-based recovery, in which a court orders the defendant to give up their 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.

Evolving Meaning

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.

Differing Views on Restitution

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.

For wrongs

Imagine that A commits a wrong against B and B sues in respect of that wrong. A will certainly be liable to pay compensation to B. If B seeks compensation then the court award will be measured by reference to the loss that B has suffered as a result of A's wrongful act. However, in certain circumstances it will be open to B to seek restitution rather than compensation. It will be in B's interest to do so if the profit that A made by his wrongful act is greater than the loss suffered by B. Or in some circumstances, the lost good "G" carries a more value to B than the actual cost of "G". For example, B possesses a rare book of say, 14th century [G], which cost only Rs 10 in that period. A has illegally stolen G [from B] and has destroyed it. Currently very few samples of G exist in the world, yet since its demand is not much, G still costs Rs 10. Since very few samples exist in the world, it is near impossible to find a person from whom G could be bought. In such a circumstance, B is entitled to get Rs 10 from A under the law of torts. However B might prefer to apply law of restitution instead [waiver of torts], and claim that he needs a copy of G rather than Rs. 10.

Whether or not a claimant can seek restitution for a wrong depends to a large extent on the particular wrong in question. For example, in English law, restitution for breach of fiduciary duty is widely available but restitution for breach of contract is fairly exceptional. The wrong could be of any one of the following types:

  • A statutory tort
  • A common law tort
  • An equitable wrong [5]
  • A breach of contract
  • Criminal offences

Notice that (1)–(5) are all causative events (see above). The law responds to each of them by imposing an obligation to pay compensatory damages. Restitution for wrongs is the subject which deals with the issue of when exactly the law also responds by imposing an obligation to make restitution.


In Attorney General v Blake,[6] an English court found itself faced with the following claim. The defendant had made a profit somewhere in the region of £60,000 as a direct result of breaching his contract with the claimant. The claimant was undoubtedly entitled to claim compensatory damages but had suffered little or no identifiable loss. It therefore decided to seek restitution for the wrong of breach of contract. The claimant won the case and the defendant was ordered to pay over his profits to the claimant. However, the court was careful to point out that the normal legal response to a breach of contract is to award compensation. An order to make restitution was said to be available only in exceptional circumstances.

To reverse unjust enrichment

Cases of intentional torts or breaches of fiduciary duty often allow for claims of unjust enrichment, as well as cases of statutory torts and breaches of contract. A plaintiff can even have a claim in unjust enrichment when there is no other substantive claim.

In the United States, the Uniform Commercial Code ("UCC") entitles a buyer who defaults restitution of the buyer's deposit to the extent it exceeds reasonable liquidated damages or actual damages.[7] If the contract does not have a liquidated damages clause, the UCC provides a statutory sum: 20% of the price or $500, whichever is less, and the buyer who defaulted is entitled to restitution of any excess.

United Nations level

See also


  1. Bourdeau, John. "1". Restitution and Implied Contracts. Am. Jur. 2d. Vol. 66. OCLC 424543049.
  2. Virgo, Graham (2006). The Principles of the Law of Restitution. New York: Oxford University Press. p. 6. ISBN 978-0199298501.
  3. Goff, Robert; Jones, Gareth H. (2002). The Law of Restitution. London: McGraw-Hill Education. p. 3. ISBN 978-0421828209.
  4. Virgo, Graham (2006). The Principles of the Law of Restitution. New York: Oxford University Press. p. 11. ISBN 978-0199298501.
  5. Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447.
  6. "Attorney General v Blake". LexisNexis.
  7. "UCC §2-718". Legal Information Institute. Cornell Law School. Retrieved 25 September 2017.
  8. "UNCAC Coalition website". United Nations. 12 May 2016. Retrieved 25 September 2017.
  9. "The Stolen Asset Recovery Initiative (StAR)". The World Bank. Archived from the original on 13 September 2017. Retrieved 25 September 2017.

Further reading

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