Restitution, also known as restitutionary damages, is a type of remedy available in many civil lawsuits and in some criminal cases. This type of remedy is calculated based on the gains of the defendant, rather than the plaintiff’s losses. Restitution basically requires a defendant to forfeit gains that they have unlawfully obtained to the plaintiff. In contracts law, restitution is used the most. Restitution in contracts law is designed to restore the injured party or the party who suffered damages, to the position they were before the formation of the contract. Parties that want restitution cannot seek lost profits or earnings caused by the breach.

In order to obtain restitution, the plaintiff must include this claim in the initial complaint. Also, restitution will not be awarded if the amount cannot be calculated with certainty.  

Restitution is commonly awarded for two main purposes: 

  1. To “make the victim” whole and restore them to their financial status before the offense occurred
  2. To prevent the unjust enrichment of the defendant (i.e., prevent them from keeping unlawful gains)

When Does Restitution Apply?

Restitution typically applies in situations where one person has benefited from someone else’s loss and there is a need to make return the victim and the defendant to the economic statuses they were at prior to the defendant’s actions. For example, in a contract lawsuit, a non-breaching party may cancel the contract and bring suit for restitution if the non-breaching party has given a benefit to the breaching party to their detriment as a result of attempting to fulfill the obligations of the contract.

In criminal cases, one of the penalties that may be imposed is requiring of the defendant to financially reimburse the value of stolen goods to the victim or pay the victim for harm caused, such as giving money to the victim to cover hospital bills in the event of criminal battery. This is known as criminal restitution.

What Is the Difference between Restitution and Compensation?

The difference between restitution and compensation lies in the manner in which the monetary award is calculated. With restitution, the award is calculated based on how much the defendant gained from the violation. With compensation, the amount is calculated based on how much the plaintiff lost, financially speaking.

In some cases, the judge will give the plaintiff a choice between restitution and compensation. For example, a restitution award may result in a higher payoff to the plaintiff than would compensation. The plaintiff may then be allowed to choose the higher award amount. This type of choice in remedies may not be available in all cases. 

What Types of Cases Result in a Restitution Award?

Restitution is commonly ordered in the following types of cases:

  • Breach of Contract: A party that has breached a valid contract may be ordered to pay restitution. The amount will be calculated based on the amount they have gained from the breach, which is usually the amount stated in the contract price. This is the most common scenario where restitution is granted.
  • Personal Injury: Restitution, rather than compensation, may be ordered in some personal injury cases. The amount will only cover “out-of-pocket” expenses, not emotional distress damages.
  • Criminal: A judge may order the criminal defendant to pay the victim restitution rather than a fine. The difference between a criminal fine and restitution is that fines are paid to the government, whereas restitution is paid directly to the victim.

In some criminal cases, a judge may order the criminal defendant to pay the victim restitution rather than a fine. The difference between a criminal fine and restitution is that fines are paid to the government, whereas restitution is paid directly to the victim. 

Are There Any Limits on Restitution Awards?

Yes. As mentioned above, restitution may not be available in all cases, especially where the amount cannot be accurately calculated. 

In a breach of contract case, a restitution damages are limited to the amount stated in the contract. For example, suppose that A agrees in a contract to sell a car only to B for $5,000.  If instead A sells the car to a different party, A might be required to pay B restitution for a maximum of $5,000, since that is what is stated in the contract. Thus, even if sold the car to more than $8,000, B can only collect on the contract price of $5,000. 

Some jurisdictions may place other caps on restitution amounts depending on the violation. The actual definition for what is restitution will depend on the laws in a given area.

Do I Need a Lawyer to Recover Restitution Damages?

If you believe that you may be eligible to receive restitution from someone, especially in a breach of contract case, you may wish to contact a business lawyer. A lawyer can help determine whether you can pursue restitution in your case.