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RESTATEMENT (SECOND) OF CONTRACTS


 

370. REQUIREMENT THAT BENEFIT BE CONFERRED

A party is entitled to restitution under the rules stated in this Restatement only to the extent that he has conferred a benefit on the other party by way of part performance or reliance.

Comments:

a. Meaning of requirement. A party's restitution interest is his interest in having restored to him any benefit that he has conferred on the other party.... However, a party's expenditures in preparation for performance that do not confer a benefit on the other party do not give rise to a restitution interest....If, for example, the performance consists of the manufacture and delivery of goods and the buyer wrongfully prevents its completion, the seller is not entitled to restitution because no benefit has been conferred on the buyer. See Illustration 2.

Illustrations....

2. A contracts to sell B a machine for $100,000. After A has spent $40,000 on the manufacture of the machine but before its completion, B repudiates the contract. A cannot get restitution of the $40,000 because no benefit was conferred on B.

5. A, a social worker, promises B to render personal services to C in return for B's promise to educate A's children. B repudiates the contract after A has rendered part of the services. A can get restitution from B for the services, even though they were not rendered to B, because they conferred a benefit on B.

371. MEASURE OF RESTITUTION INTEREST

If a sum of money is awarded to protect a party's restitution interest, it may as justice requires be measured by either

(a) the reasonable value to the other party of what he received in terms of what it would have cost him to obtain it from a person in the claimant's position, or

(b) the extent to which the other party's property has been increased in value or his other interests advanced.

Comments:

a. Measure of benefit....An especially important choice is that between the reasonable value to a party of what he received in terms of what it would have cost him to obtain it from a person in the claimant's position and the addition to the wealth of that party as measured by the extent to which his property has been increased in value or his other interests advanced. In practice, the first measure is usually based on the market price of such a substitute. Under the rule stated in this Section, the court has considerable discretion in making the choice between these two measures of benefit....

b. Choice of measure....The reasonable value to the party from whom restitution is sought (Paragraph (a)), is, however, usually greater than the addition to his wealth (Paragraph (b)). If this is so, a party seeking restitution for part performance is commonly allowed the more generous measure of reasonable value, unless that measure is unduly difficult to apply, except when he is in breach (374)....

 

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