Also known as: return of performance · returning performance · restitution
Written by attorneys · grounded in primary & secondary sources — see below
Performance that one party to a contract must render to the other in exchange for the performance or promise received. The concept measures whether an assignment or transfer would materially impair the non-transferring party's ability to receive the bargained-for exchange.
Metro Motors relied on Apex Components for timely engine modules. Apex's late shipment forced Metro to halt its assembly line and pay penalties to dealerships. Metro sought a monetary award covering those losses. The court treated the request as compensatory damages because it sought money to redress harm already suffered rather than any specific future performance.
Buyer and Seller agreed to transfer a parcel both believed contained buildable acreage. After signing, they learned zoning barred construction. Buyer sought to avoid the contract. The court examined whether the mistake materially affected the exchange of performances and considered possible restitution before deciding voidability.
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WarehouseDev filled a shared retention basin required by recorded servitudes. Neighboring Owners suffered flooding. They sued for restoration and damages. The court weighed the servitude's flood-control purpose, the knowing violation, and the costs and benefits of enforcement before ordering injunctive relief plus compensation.
Donee promised to appoint trust property to a specific beneficiary in exchange for a cash payment. Donee later refused. The promisee could not compel the appointment or recover the property but recovered the value paid because the contract concerned a power not presently exercisable.
A client discovered that her former lawyer had misappropriated funds and asked the current lawyer not to report it after receiving private restitution. The current lawyer still reported the misconduct. The client's preference and the restitution agreement did not excuse the reporting obligation.
After a buyer breached a goods contract, the seller withheld delivery. The buyer sought return of payments exceeding the seller's liquidated damages. The court measured any restitution award by either the reasonable value of what the seller received or the increase in the seller's property value, as justice required.
Return performance refers to the ongoing contractual duties one party owes the other. Expectation damages aim to place the injured party in the position it would have occupied had the contract been performed. The two concepts intersect when an assignment would impair the non-assigning party's ability to receive the performance it bargained for.
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An assignment impairs that prospect when it reduces the non-assigning party's incentive or ability to perform its remaining duties. Classic examples include assigning payment rights under a continuing supply contract where the seller's performance depends on receiving ongoing payment from the original buyer.
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No. When protecting a restitution interest, courts may measure recovery by the reasonable value of what the recipient obtained or by the increase in the recipient's property value. The choice depends on which measure justice requires under the circumstances.
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…this mistake has a material affect on the agreed exchange of performances, account is taken of any relief by way of reformation, restitution, or otherwise.[^maj-3] Both Professor Corbin and the Restatement emphasize the limited place of the doctrine of mistake in the law of contracts. They, along with most modern commentators,…