R2d § 373
Restitution When Other Party Is in Breach
Subject to the rule stated in subsection (2), on a breach by non-performance that gives rise to a claim for damages for total breach or on a repudiation, the injured party is entitled to restitution for any benefit that he has conferred on the other party by way of part performance or reliance. The injured party has no right to restitution if he has performed all of his duties under the contract and no performance by the other party remains due other than payment of a definite sum of money for that performance.
Professor's notes
Section 373 gives the injured party the option of recovering restitution — the value of benefits conferred — rather than expectation damages when the other party has totally breached or repudiated. Subsection (2) blocks this election in one situation: if the plaintiff has fully performed and only a fixed sum of money remains due, restitution is unavailable. That plaintiff must sue for the contract price, not quantum meruit.
The doctrinal move is to let the injured party escape a losing contract. Expectation damages put the plaintiff where she would have been had the contract been performed — but if that position is worse than her pre-contract position (a below-cost contract), expectation gives her a loss. Restitution, by contrast, restores the benefit she conferred on the defendant. Courts have divided on whether restitution under § 373 can exceed the contract price; the weight of authority under the R2d is that it can, because the plaintiff is electing a non-contract measure.
Paradigm for § 373: A partially builds B's house before B repudiates. A has conferred a benefit (the partial structure) worth $40,000 in market terms, even though A's own costs were $35,000 and the contract price for the whole job was $90,000. A may sue in restitution for the value conferred rather than for pro-rated contract price. Subsection (2) paradigm: A sells and delivers 100 widgets to B under a contract for $5,000, then B refuses to pay. A has fully performed; no performance by B remains other than the $5,000. A must sue for the price, not for restitutionary value.
Students conflate § 373 with § 374 (restitution for the party in breach). Ask: who is seeking restitution under § 373? The injured party — the one who did not breach. That matters because the measurement and limits differ. Ask whether subsection (2) is fair: why should full performance eliminate the restitution option? The answer is that a party who has fully performed and is owed a fixed sum is simply a creditor; restitution's purpose of restoring unjust enrichment maps cleanly onto an action for the agreed price.
Connect to R2d § 344 (the three interests: expectation, reliance, restitution), R2d § 347 (expectation damages), and the Bauer v. Sawyer / Van Wagner materials in Chapter 27 on alternative remedies. Chapter 27 teaches restitution as one remedial option among several; § 373 governs the injured-party's restitution claim and anchors the comparison between expectation and restitution measures.
Section 373 lets the non-breaching party recover restitution when the other side has materially breached or repudiated. The principal limitation in subsection (2): that restitution is not available when the plaintiff has fully performed and only a fixed sum remains owed: channels such claims into ordinary contract damages, where the measure is the unpaid contract price.