Fundamental difference between restitution and rescission Forum

[Danneskjöld]

. Moved response below, didn't see your answer

[PKSebben]

I already answered the difference between restitution and rescission.

[MrKappus]

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.

[Restitution] is a remedy for unjust enrichment...

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.

[Rescission] is a remedy for defects in formation or performance.

Yes. My answers were terrible.

[MrKappus]

My A in K's impressed (and surprised) me. Sue me. I apologize for douchenozzledom and hope the thread will forgive me.

[PKSebben]

Frankly I missed your first post and I apologize for that. But I'm still really really impressed with your 3 As. LOL.

[Danneskjöld]

Edit: Just saw this:

PKSebben wrote:
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.

There is a lot of wrong here. How can you say it's equitable, and a replacement for expectation damages? You're also conflating restitution with quasi-contract. Distinguish: breaching D from breaching P, as in my examples earlier. Clearly, a breaching D where expectation damages are bad is getting a remedy at law, not equity, equal to the gains given to D. But, a breaching P recovers based on FMV on quasi-contract, which is distinct from restitution, and is equitable.

Edit: they are distinct theories. I mean, one is based on gains of the D the other on FMV conferred by a breaching P. Those are different theories. You even confirm restitution damages is a replacement for expectation damages, which means its damages, not an equitable remedy.

[MrKappus]

Frankly I missed your first post and I apologize for that. But I'm still really really impressed with your 3 As. LOL.

Haha 1 of 3 IN THE CLASS. I got a few more than 3. Not much more though. Fine. My K's reading is full of fail and PK is the dopeness. Why do I still read TLS in law school. Sigh.

[PKSebben]

Edit: Just saw this:

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.

There is a lot of wrong here. How can you say it's equitable, and a replacement for expectation damages? You're also conflating restitution with quasi-contract. Distinguish: breaching D from breaching P, as in my examples earlier. Clearly, a breaching D where expectation damages are bad is getting a remedy at law, not equity, equal to the gains given to D. But, a breaching P recovers based on FMV on quasi-contract, which is distinct from restitution, and is equitable.

Chief -- restitution is quasi-k in 99% of jurisdictions. Restitution can either be a legal or equitable remedy, but again 99% of courts would classify it as equitable -- as if it fucking matters anymore.

It's not a replacement for expectation damages, dick -- nor did I say it was. It's a separate remedy. Where a contract has been breached and the non-breaching party has not fully performed, he can rescind the contract (thus giving up expectation, dillweed) and recover in restitution.

[PKSebben]

7th Circuit on the subject of equitable vs. legal nature of restitution

The Court's search in Mertens was, however, for distinctively equitable relief on the one hand and, on the other, distinctively legal relief, such as damages, which though sometimes awarded by a court of equity under the "cleanup" doctrine, Medtronic, Inc. v. Intermedics, Inc., supra, 725 F.2d at 442-43, is the classic remedy at law. Unfortunately restitution straddles this divide. The Court may have seemed to place it on the equitable side; other cases, too, have described restitution as an equitable remedy. E.g., Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, supra, 494 U.S. at 570, 110 S.Ct. at 1347; Tull v. United States, 481 U.S. 412, 424, 107 S.Ct. 1831, 1838, 95 L.Ed.2d 365 (1987). But we think it more likely that all the Court meant in any of these cases was that restitution, in contrast to damages, is a remedy commonly ordered in equity cases and therefore an equitable remedy in a sense in which damages, though occasionally awarded in equity cases, are not. Restitution is merely not an exclusively equitable remedy like an injunction. Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 49 n. 7, 109 S.Ct. 2782, 2794 n. 7, 106 L.Ed.2d 26 (1989); United States v. Fountain, 768 F.2d 790, 801 (7th Cir.1985); Austin v. Shalala, 994 F.2d 1170, 1176 n. 6 (5th Cir.1993). On this interpretation, which seems the more plausible and conforms to a correct understanding of both historical and current practice, restitution is a legal remedy when ordered in a case at law and an equitable remedy (rather than a legal remedy pressed into service to provide complete relief in an equity case--the rationale of the "clean up" doctrine) when ordered in an equity case. This interpretation helps the Department of Labor in this case, since, although it was seeking restitution against a nonfiduciary, the basis for its claim was a duty founded on equitable rather than legal principles. Had the Department's claim gone to trial, therefore, neither party would have been entitled to a jury trial. Cf. Wardle v. Central States, Southeast & Southwest Areas Pension Fund, 627 F.2d 820, 829 (7th Cir.1980); In re Vorpahl, 695 F.2d 318 (8th Cir.1982).

[MrKappus]

7th Circuit on the subject of equitable vs. legal nature of restitution

The Court's search in Mertens was, however, for distinctively equitable relief on the one hand and, on the other, distinctively legal relief, such as damages, which though sometimes awarded by a court of equity under the "cleanup" doctrine, Medtronic, Inc. v. Intermedics, Inc., supra, 725 F.2d at 442-43, is the classic remedy at law. Unfortunately restitution straddles this divide. The Court may have seemed to place it on the equitable side; other cases, too, have described restitution as an equitable remedy. E.g., Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, supra, 494 U.S. at 570, 110 S.Ct. at 1347; Tull v. United States, 481 U.S. 412, 424, 107 S.Ct. 1831, 1838, 95 L.Ed.2d 365 (1987). But we think it more likely that all the Court meant in any of these cases was that restitution, in contrast to damages, is a remedy commonly ordered in equity cases and therefore an equitable remedy in a sense in which damages, though occasionally awarded in equity cases, are not. Restitution is merely not an exclusively equitable remedy like an injunction. Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 49 n. 7, 109 S.Ct. 2782, 2794 n. 7, 106 L.Ed.2d 26 (1989); United States v. Fountain, 768 F.2d 790, 801 (7th Cir.1985); Austin v. Shalala, 994 F.2d 1170, 1176 n. 6 (5th Cir.1993). On this interpretation, which seems the more plausible and conforms to a correct understanding of both historical and current practice, restitution is a legal remedy when ordered in a case at law and an equitable remedy (rather than a legal remedy pressed into service to provide complete relief in an equity case--the rationale of the "clean up" doctrine) when ordered in an equity case. This interpretation helps the Department of Labor in this case, since, although it was seeking restitution against a nonfiduciary, the basis for its claim was a duty founded on equitable rather than legal principles. Had the Department's claim gone to trial, therefore, neither party would have been entitled to a jury trial. Cf. Wardle v. Central States, Southeast & Southwest Areas Pension Fund, 627 F.2d 820, 829 (7th Cir.1980); In re Vorpahl, 695 F.2d 318 (8th Cir.1982).

Cool.

[PKSebben]

The real takeaway from this thread is that 0Ls shouldn't answer law questions. I think we can all agree there.

[solidsnake]

This thread is lulz.

Four situations where remedy of restitution comes up (historically, both a legal remedy [writ of assumpsit] and an equitable remedy):

(1) Alternative to expectation damages when def has materially breached an enforceable K
a. Fallback measure -- because expectancy fails to meet requirements of certainty, foreseeable, mitigation, or causation
b. Losing contract -- where the expectancy is nothing more than lost profits
(2) Def has breached a K which is unenforceable because of the existence of a valid defense such as Statute of Frauds;
(3) Restitution may be available when pl (rather than def) is in breach of K [the materially-breaching plaintiff]
a. Traditional -- no recovery
b. Majority/Modern -- recovery for FMV not K price
c. R2d -- recovery for FMV not K price only if pl's material breach wasn't willful (intentionally breaching to avoid a losing-profit K is considered willful)
(4) No actual contract exists but pl has provided something of value to def under circumstances where social policy demands that pl be compensated. In such cases, the courts will create a contract implied in law [quasi-contract] and grant restitutionary relief. [was pl an officious intermeddler?]

Rescission is an equitable remedy given where formation defects (e.g., mistake, etc) or performance defects (e.g., def materially breaches -- pl can elect to rescind K and not have to perform. Def can then come back and counterclaim for restitution, if jx allows)

[Danneskjöld]

7th Circuit on the subject of equitable vs. legal nature of restitution

The Court's search in Mertens was, however, for distinctively equitable relief on the one hand and, on the other, distinctively legal relief, such as damages, which though sometimes awarded by a court of equity under the "cleanup" doctrine, Medtronic, Inc. v. Intermedics, Inc., supra, 725 F.2d at 442-43, is the classic remedy at law. Unfortunately restitution straddles this divide. The Court may have seemed to place it on the equitable side; other cases, too, have described restitution as an equitable remedy. E.g., Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry, supra, 494 U.S. at 570, 110 S.Ct. at 1347; Tull v. United States, 481 U.S. 412, 424, 107 S.Ct. 1831, 1838, 95 L.Ed.2d 365 (1987). But we think it more likely that all the Court meant in any of these cases was that restitution, in contrast to damages, is a remedy commonly ordered in equity cases and therefore an equitable remedy in a sense in which damages, though occasionally awarded in equity cases, are not. Restitution is merely not an exclusively equitable remedy like an injunction. Granfinanciera, S.A. v. Nordberg, 492 U.S. 33, 49 n. 7, 109 S.Ct. 2782, 2794 n. 7, 106 L.Ed.2d 26 (1989); United States v. Fountain, 768 F.2d 790, 801 (7th Cir.1985); Austin v. Shalala, 994 F.2d 1170, 1176 n. 6 (5th Cir.1993). On this interpretation, which seems the more plausible and conforms to a correct understanding of both historical and current practice, restitution is a legal remedy when ordered in a case at law and an equitable remedy (rather than a legal remedy pressed into service to provide complete relief in an equity case--the rationale of the "clean up" doctrine) when ordered in an equity case. This interpretation helps the Department of Labor in this case, since, although it was seeking restitution against a nonfiduciary, the basis for its claim was a duty founded on equitable rather than legal principles. Had the Department's claim gone to trial, therefore, neither party would have been entitled to a jury trial. Cf. Wardle v. Central States, Southeast & Southwest Areas Pension Fund, 627 F.2d 820, 829 (7th Cir.1980); In re Vorpahl, 695 F.2d 318 (8th Cir.1982).

Cool.

First, that case clearly says: "restitution is a legal remedy when ordered in a case at law." A K is a case at law, so what we are talking about is a legal remedy. A quasi-contractual recovery is not a case on the contract at all, i.e., not a case at law, it is a purely equitable recovery. That's what they're talking about.

Second, read the case, it's talking about seeking restitution against a fiduciary, i.e., fiduciary breach ("interpretation helps the Department of Labor in this case, since, although it was seeking restitution against a nonfiduciary, the basis for its claim was a duty founded on equitable rather than legal principles"), which is not a contract claim at all!

[MrKappus]

I love people who are like "This thread is lulz," who then proceed to offer a completely fucking useless contribution. Thx for the help. You're needed elsewhere, I'm sure.

[3ThrowAway99]

PKS wrote: "The real takeaway from this thread is that 0Ls shouldn't answer law questions. I think we can all agree there."

Can we though? What does a 0L answering have to do with all the 1L (or whatever _L) disagreement and confusion over the subject?

[Danneskjöld]

PKS wrote: "The real takeaway from this thread is that 0Ls shouldn't answer law questions. I think we can all agree there."

Can we though? What does a 0L answering have to do with all the 1L (or whatever _L) disagreement and confusion over the subject?

Your response was LOLtastic, nothing more, nothing less. PK and MrKappus are interesting to discuss the semantics (which is what law is all about) with as an intellectual matter. That's the difference.

[3ThrowAway99]

Alright, alright, I admit given the context of the thread I was definitely off... hope I didn't offend anyone with my argumentativeness.. Didn't mean anything personally (I took things personally- my bad). Obviously the poster was looking for very specific legal definitions related to "K" law apparently, and I was off on that. Best and all have a good night.

[PKSebben]

In Florida, for example, to make out a claim for unjust enrichment (which is one version of restitution in florida (another being quantum meritum)you have to plead inadequacy of a remedy at law to get unjust enrichment. That means that the K damages are unavailable. Just because you get cash money doesn't make it damages at law. The case above is certainly about fiduciaries, but if you check the cites, those cases are not all fiduciary cases and the analysis is applicable to all actions. HTH. Some jurisdictions would classify unjust enrichment as legal damages. Truth is, it doesn't really matter in most cases because of the law/equity merger.

[Jordan77]

Restitution is a quasi-contractual remedy. If you cannot plead breach of contract damages, you plead restitution/unjust enrichment as a quasi-contractual remedy. The end.

[ikari_ningen]

I'm a 0L and what is this?