Fundamental difference between restitution and rescission

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1LFTW
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Fundamental difference between restitution and rescission

Postby 1LFTW » Tue Jun 22, 2010 10:32 pm

Thanks!

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Lawquacious
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Re: Fundamental difference between restitution and rescission

Postby Lawquacious » Tue Jun 22, 2010 10:43 pm

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Last edited by Lawquacious on Sun Mar 04, 2012 12:29 am, edited 1 time in total.

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MrKappus
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Re: Fundamental difference between restitution and rescission

Postby MrKappus » Tue Jun 22, 2010 10:56 pm

There isn't a fundamental difference. They're apples/oranges. One is a remedy for unjust enrichment, one is a remedy for defects in formation or performance. Are you in LS?

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vamedic03
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Re: Fundamental difference between restitution and rescission

Postby vamedic03 » Tue Jun 22, 2010 11:18 pm

Lawquacious wrote:I'll take a shot, though bear in mind that I am 0L, so I may not be hitting more specific definitions that are applicable to any course you may be taking:


Don't answer the question.

Danneskjöld
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Re: Fundamental difference between restitution and rescission

Postby Danneskjöld » Tue Jun 22, 2010 11:25 pm

How could anyone possibly confuse these?

Restitution is a remedy at law, the other is equitable--so I guess that's the "fundamental difference." They don't even arise in any overlapping circumstances that I can think of.

Was this just flame?

Danneskjöld
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Re: Fundamental difference between restitution and rescission

Postby Danneskjöld » Tue Jun 22, 2010 11:28 pm

Lawquacious wrote:I'll take a shot, though bear in mind that I am 0L, so I may not be hitting more specific definitions that are applicable to any course you may be taking:

Restitution
implies that there is an action being taken or a sum being paid to make right a wrong or cover damages that have been incurred by another party. I imagine the term can be used formally or informally, so this is my understanding of the general or informal definition. Rescission can also involve an action or sum related to correcting a situation, but there is not necessarily harm implied: it is rather an overturning or amendment of a previous course of action or contract (or law) due to present circumstances or further consideration.


This made me LOL, tyft... makes me want to head over to the student doctor forum and start answering their Qs.

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MrKappus
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Re: Fundamental difference between restitution and rescission

Postby MrKappus » Tue Jun 22, 2010 11:30 pm

Danneskjöld wrote:How could anyone possibly confuse these?

Restitution is a remedy at law, the other is equitable. They don't even arise in any overlapping circumstances that I can think of.

Was this just flame?


+1

In plaintiff-in-default situations, a D must rescind the K before the P-in-default can get restitution, but I cannot think of a need to ID the "fundamental difference." I think OP was an overly eager 0L.

To the 0L responder: the informal/formal distinction is irrelevant. Either the breacher got $ to which he isn't entitled, or he didn't. Formality doesn't matter. Also, you have to be careful using the word "consideration" wrt K's. It has a different meaning.

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yinz
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Re: Fundamental difference between restitution and rescission

Postby yinz » Tue Jun 22, 2010 11:37 pm

vamedic03 wrote:
Lawquacious wrote:I'll take a shot, though bear in mind that I am 0L, so I may not be hitting more specific definitions that are applicable to any course you may be taking:


Don't answer the question.


--ImageRemoved--

Danneskjöld
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Re: Fundamental difference between restitution and rescission

Postby Danneskjöld » Tue Jun 22, 2010 11:43 pm

MrKappus wrote:
Danneskjöld wrote:How could anyone possibly confuse these?

Restitution is a remedy at law, the other is equitable. They don't even arise in any overlapping circumstances that I can think of.

Was this just flame?


+1

In plaintiff-in-default situations, a D must rescind the K before the P-in-default can get restitution, but I cannot think of a need to ID the "fundamental difference." I think OP was an overly eager 0L.

To the 0L responder: the informal/formal distinction is irrelevant. Either the breacher got $ to which he isn't entitled, or he didn't. Formality doesn't matter. Also, you have to be careful using the word "consideration" wrt K's. It has a different meaning.


If plaintiff is the breaching party and suing for what you're calling "Restitution" I think you would be thinking of quasi-contract recovery, which is isn't a remedy on the contact at all. It somewhat mirrors restitution because you are preventing unjust enrichment, but you get the fair value of the services/goods provided (from the P's perspective) whereas restitution is based on the benefit to the D (so value based on D's perspective). Once the contract is rescinded, there is no recovery on the contract, so no restitution remedy at law would apply.

FWIW

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sundance95
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Re: Fundamental difference between restitution and rescission

Postby sundance95 » Tue Jun 22, 2010 11:48 pm

yinz wrote:
vamedic03 wrote:
Lawquacious wrote:I'll take a shot, though bear in mind that I am 0L, so I may not be hitting more specific definitions that are applicable to any course you may be taking:


Don't answer the question.


--ImageRemoved--


As a 0L, QFT.

RW65
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Re: Fundamental difference between restitution and rescission

Postby RW65 » Tue Jun 22, 2010 11:53 pm

Lawquacious wrote:I'll take a shot, though bear in mind that I am 0L, so I may not be hitting more specific definitions that are applicable to any course you may be taking:

Restitution
implies that there is an action being taken or a sum being paid to make right a wrong or cover damages that have been incurred by another party. I imagine the term can be used formally or informally, so this is my understanding of the general or informal definition. Rescission can also involve an action or sum related to correcting a situation, but there is not necessarily harm implied: it is rather an overturning or amendment of a previous course of action or contract (or law) due to present circumstances or further consideration.


Looks like disco_barred might have to give out two awards today.

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MrKappus
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Re: Fundamental difference between restitution and rescission

Postby MrKappus » Tue Jun 22, 2010 11:56 pm

Danneskjöld wrote:If plaintiff is the breaching party and suing for what you're calling "Restitution" I think you would be thinking of quasi-contract recovery, which is isn't a remedy on the contact at all. It somewhat mirrors restitution because you are preventing unjust enrichment, but you get the fair value of the services/goods provided (from the P's perspective) whereas restitution is based on the benefit to the D (so value based on D's perspective). Once the contract is rescinded, there is no recovery on the contract, so no restitution remedy at law would apply.

FWIW


Maybe we're talking past one another here, but I don't believe restitution involves recovery on the K. Restitution involves recovery of payments or the value of services rendered.

If P breaches, that gives D the option to terminate/rescind the K, after which P is entitled to restitution for payments made in overage of any damages D suffered. See, e.g., DeLeon v. Aldrete 398 S.W.2d 160 (Tex.Civ.App.1965).

Edit: I'm not sure your distinction b/t legal/equitable remedies is clear to me. Legal remedies are money. Equitable remedies are forcing certain things to happen. Right?

Danneskjöld
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Re: Fundamental difference between restitution and rescission

Postby Danneskjöld » Wed Jun 23, 2010 12:12 am

MrKappus wrote:
Danneskjöld wrote:If plaintiff is the breaching party and suing for what you're calling "Restitution" I think you would be thinking of quasi-contract recovery, which is isn't a remedy on the contact at all. It somewhat mirrors restitution because you are preventing unjust enrichment, but you get the fair value of the services/goods provided (from the P's perspective) whereas restitution is based on the benefit to the D (so value based on D's perspective). Once the contract is rescinded, there is no recovery on the contract, so no restitution remedy at law would apply.

FWIW


Maybe we're talking past one another here, but I don't believe restitution involves recovery on the K. Restitution involves recovery of payments or the value of services rendered.

If P breaches, that gives D the option to terminate/rescind the K, after which P is entitled to restitution for payments made in overage of any damages D suffered. See, e.g., DeLeon v. Aldrete 398 S.W.2d 160 (Tex.Civ.App.1965).

Edit: I'm not sure your distinction b/t legal/equitable remedies is clear to me. Legal remedies are money. Equitable remedies are forcing certain things to happen. Right?


That case you cited is dealing with land sale and conveyancing, which is its own animal and deals more with the law of real property than contracts. Restitution damages are paid to a plaintiff when expectation damages are less, and require the D to give up his gains.

But, quasi-contract recovery is where the P is not entitled to any recovery because they were in breach, thus immediately destroying the other party's duty of performance on the contract (a breaching P can't possibly recover on the contract, they're in breach!). To prevent injustice, courts will allow for recovery of the market value of the services performed.

For example: A contractor contracts to build a roof and a floor for $20,000. He provides a roof that would otherwise have cost the owner $5,000 to have built, but then breaches the contract in order to take on more lucrative work. The contractor may recover $5,000 from the owner, even though he breached. That's quasi-contract recovery to prevent unjust enrichment.

Edit: OTOH, if an author contracts to write a book for a publisher, and receives $100k as a signing bonus but then refuses to write the book or return the money, then $100k would be the restitution recovery (since expectation damages are too speculative). Again, to prevent unjust enrichment, but here the D is the breacher (which should always be the case for restitution I think)
Last edited by Danneskjöld on Wed Jun 23, 2010 12:15 am, edited 1 time in total.

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Lawquacious
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Re: Fundamental difference between restitution and rescission

Postby Lawquacious » Wed Jun 23, 2010 12:15 am

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Last edited by Lawquacious on Sun Mar 04, 2012 12:30 am, edited 1 time in total.

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Lawquacious
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Re: Fundamental difference between restitution and rescission

Postby Lawquacious » Wed Jun 23, 2010 12:18 am

As for informal versus formal, the whole reason that I was mocked is that most respondents took a formal approach to answering whereas I specified my definition distinction was informal in nature. In any case, enough said.

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MrKappus
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Re: Fundamental difference between restitution and rescission

Postby MrKappus » Wed Jun 23, 2010 12:20 am

Danneskjöld wrote:That case you cited is dealing with land sale and conveyancing, which is its own animal and deals more with the law of real property than contracts. Restitution damages are paid to a plaintiff when expectation damages are less, and require the D to give up his gains.

But, quasi-contract recovery is where the P is not entitled to any recovery because they were in breach, thus immediately destroying the other party's duty of performance on the contract (a breaching P can't possibly recover on the contract, they're in breach!). To prevent injustice, courts will allow for recovery of the market value of the services performed.

For example: A contractor contracts to build a roof and a floor for $20,000. He provides a roof that would otherwise have cost the owner $5,000 to have built, but then breaches the contract in order to take on more lucrative work. The contractor may recover $5,000 from the owner, even though he breached. That's quasi-contract recovery to prevent unjust enrichment.

Edit: OTOH, if an author contracts to write a book for a publisher, and receives $100k as a signing bonus but then refuses to write the book or return the money, then $100k would be the restitution recovery (since expectation damages are too speculative). Again, to prevent unjust enrichment, but here the D is the breacher (which should always be the case for restitution I think)


I think we're saying the same thing. Restitution isn't recovery on the K. It's "recovery of what one side got that it shouldn't have."

I was just pointing out that a P in default can get restitution, if D's been unjustly enriched. The property/deed element isn't important. The case was about a D selling a something, 2/3 of the value of which had been paid. He wasn't allowed to keep the 2/3 and had to pay restitution to P.

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MrKappus
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Re: Fundamental difference between restitution and rescission

Postby MrKappus » Wed Jun 23, 2010 12:21 am

Lawquacious wrote:As for informal versus formal, the whole reason that I was mocked is that most respondents took a formal approach to answering whereas I specified my definition distinction was informal in nature. In any case, enough said.


You'll want to be careful w/ "respondents" too, just like "consideration."

Edit: I'm seeing the problem. You implied that I said restitution was a form of recovery on the K (in your response to my "+1" post). It's not, and I don't think I said it was. Restitution can be had where there was a K or not.
Last edited by MrKappus on Wed Jun 23, 2010 12:23 am, edited 1 time in total.

Danneskjöld
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Re: Fundamental difference between restitution and rescission

Postby Danneskjöld » Wed Jun 23, 2010 12:22 am

Lawquacious wrote:In so far as the question was presented as one of simple definition I don't think I was so far off as all the mocking implies... I guess the 0L comment was taken as an open invitation to this though.


I don't think anything you said was even in the ballpark of correct for even the simple definitions though. Short of random words strung together, not sure how much more far off it could get.

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Lawquacious
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Re: Fundamental difference between restitution and rescission

Postby Lawquacious » Wed Jun 23, 2010 12:23 am

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Last edited by Lawquacious on Sun Mar 04, 2012 12:30 am, edited 3 times in total.

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PKSebben
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Re: Fundamental difference between restitution and rescission

Postby PKSebben » Wed Jun 23, 2010 12:24 am

Holy shit every answer in this thread is terrible. Just terrible.

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MrKappus
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Re: Fundamental difference between restitution and rescission

Postby MrKappus » Wed Jun 23, 2010 12:26 am

PKSebben wrote:Holy shit every answer in this thread is terrible. Just terrible.


Got an A in K's (1 of 3)...if I disappointed you, I apologize.

Edit: *eagerly awaiting PKS's answer to the OP*

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Lawquacious
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Re: Fundamental difference between restitution and rescission

Postby Lawquacious » Wed Jun 23, 2010 12:28 am

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Last edited by Lawquacious on Sun Mar 04, 2012 12:30 am, edited 1 time in total.

Danneskjöld
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Re: Fundamental difference between restitution and rescission

Postby Danneskjöld » Wed Jun 23, 2010 12:32 am

MrKappus wrote:
Danneskjöld wrote:That case you cited is dealing with land sale and conveyancing, which is its own animal and deals more with the law of real property than contracts. Restitution damages are paid to a plaintiff when expectation damages are less, and require the D to give up his gains.

But, quasi-contract recovery is where the P is not entitled to any recovery because they were in breach, thus immediately destroying the other party's duty of performance on the contract (a breaching P can't possibly recover on the contract, they're in breach!). To prevent injustice, courts will allow for recovery of the market value of the services performed.

For example: A contractor contracts to build a roof and a floor for $20,000. He provides a roof that would otherwise have cost the owner $5,000 to have built, but then breaches the contract in order to take on more lucrative work. The contractor may recover $5,000 from the owner, even though he breached. That's quasi-contract recovery to prevent unjust enrichment.

Edit: OTOH, if an author contracts to write a book for a publisher, and receives $100k as a signing bonus but then refuses to write the book or return the money, then $100k would be the restitution recovery (since expectation damages are too speculative). Again, to prevent unjust enrichment, but here the D is the breacher (which should always be the case for restitution I think)


I think we're saying the same thing. Restitution isn't recovery on the K. It's "recovery of what one side got that it shouldn't have."

I was just pointing out that a P in default can get restitution, if D's been unjustly enriched. The property/deed element isn't important. The case was about a D selling a something, 2/3 of the value of which had been paid. He wasn't allowed to keep the 2/3 and had to pay restitution to P.


Nah... First the court paid the owner expectation damages, then distinguishes what it calls the forfeiture rule. The court is using "Restitution" generally, not as a remedy for the contract. The remedy being applied is expectation damages ($200) to the owner, then subtracting that from the money paid already, and the balance being ordered returned. That's not a restitution analysis, really.

Look at this from your case: "What is generally described as the majority rule in this country is that a defaulting purchaser cannot recover any money paid by him under the contract to the vendor even though, as a result of the purchaser's breach, the vendor has abandoned all idea of further performance and retains the money, not for application on the purchase price, but as forfeited."

i.e., no recovery on the contract for a breaching party. But, we'll give him some of his money back because it's equitable. That's a quasi-contract analysis in your case.

Pro-tip: You gotta learn to look past the labels, court's aren't always precise in their language. You have to look at what they're doing.

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PKSebben
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Re: Fundamental difference between restitution and rescission

Postby PKSebben » Wed Jun 23, 2010 12:34 am

They are totally different remedies.

Both are equitable remedies. Restitution is the equitable remedy when either the contract is unenforceable or the expectancy (benefit of the bargain) price wouldn't leave the P in fair position. Restitution is quasi-contractual, so P may recover the FMV of his services, not the K price.

Rescission is also an equitable remedy applied by courts. Courts can rescind a contract based on mutual mistake of fact relied on by both parties, among other things. Rescission returns parties to the status quo before the contract.

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PKSebben
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Re: Fundamental difference between restitution and rescission

Postby PKSebben » Wed Jun 23, 2010 12:36 am

MrKappus wrote:
PKSebben wrote:Holy shit every answer in this thread is terrible. Just terrible.


Got an A in K's (1 of 3)...if I disappointed you, I apologize.

Edit: *eagerly awaiting PKS's answer to the OP*


Holy fuck, I'm so impressed.




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