Three types: There are three distinct kinds of interests on the part of a disappointed contracting party

which may be protected by courts: [327]

1. Expectation: In most breach of contract cases, the plaintiff will seek, and receive, protection for her
"expectation interest." Here, the court attempts to put the plaintiff in the position he would have been in
had the contract been performed. In other words, the plaintiff is given the "benefit of her bargain,"
including any profits she would have made from the contract.
2. Reliance: Sometimes the plaintiff receives protection for his reliance interest. Here, the court puts the
plaintiff in as good a position as he was in before the contract was made. To do this, the court usually
awards the plaintiff his out-of-pocket costs incurred in the performance he has already rendered
(including preparation to perform). When reliance is protected, the plaintiff does not recover any part of
the profits he would have made on the contract had it been completed.
a. When used: The reliance interest is used mainly: (1) when it is impossible to measure the plaintiff's
expectation interest accurately (e.g., when profits from a new business which the plaintiff would have
been able to operate cannot be computed accurately); and (2) when the plaintiff recovers on a promissory
estoppel theory.
3. Restitution: Finally, courts sometimes protect the plaintiff's "restitution interest." That is, the court
forces the defendant to pay the plaintiff an amount equal to the benefit which the defendant has received
from the plaintiff's performance. Restitution is designed to prevent unjust enrichment.
a. When used: The restitution measure is most commonly used where: (1) a non-breaching plaintiff has
partly performed, and the restitution measure is greater than the contract price; and (2) a breaching
plaintiff has not substantially performed, but is allowed to recover the benefit of what he has conferred on
the defendant.
Note: In contract actions, all three of these measures are used at least some of the time. In quasi-contract
actions, expectation damages are almost never awarded, but reliance and restitution damages frequently
are. (For instance, reliance damages are often used in promissory estoppel cases where the suit is really in
quasi-contract, and restitution is used by materially-breaching plaintiffs who are in effect suing in quasicontract.)
SUITS IN QUASI-CONTRACT
A. Where allowed: There are a number of situations where recovery "on the contract" is not possible or
allowed: (1) situations where there was no attempt even to form a contract, but the plaintiff deserves some
measure of recovery anyway; (2) cases where there was an attempt to form a contract, but the contract is
unenforceable because of Statute of Frauds, impossibility, illegality, etc.; (3) cases where there is an
enforceable contract, but the plaintiff has materially breached, and therefore may not recover on the
contract; and (4) cases where the defendant has breached but the plaintiff is not entitled to damages on the
contract. In all of these situations, the plaintiff will often be allowed to recover in "quasi-contract." [345]
1. Measure of damages: Courts almost never award expectation damages in quasi-contract suits. Both
reliance damages and restitution damages are frequently awarded in quasi-contract suits (with courts
deciding which of these two to use based on the equities of the particular case.). [345]
B. No contract attempted: The courts sometimes award P a recovery where no contract was even
attempted. The most common example is where P supplies emergency services to D, without first forming
a contract to do so. (Ex: P, a doctor, sees D lying unconscious in the street, and gives D CPR. The court
will probably allow P to recover the fair market value of her services, in an action in quasi-contract) [345]
C. Unenforceable contracts: The parties may attempt to form a binding contract which turns out to be
unenforceable or avoidable. This may happen because of the Statute of Frauds, mistake, illegality,

impossibility, or frustration of purpose. In any of these cases, the court will usually let P sue in quasicontract, and recover either the value of the services performed (restitution) or P's reasonable
expenditures (reliance). [346]
D. Breaching plaintiff: A plaintiff who has materially breached may normally bring a quasi-contract suit,
and recover his restitution interest, less the defendant's damages for the breach. This is sometimes called a
recovery in "quantum meruit" ("as much as he deserves"). [347]
.Construction cases: Quasi-contract recovery by a breaching plaintiff is most often found in construction
cases. Here, the builder gets to recover the value to the owner of the work done, even where the work
does not constitute substantial performance of the contract. [347]
2. Limited to pro-rata contract price: When a defaulting plaintiff sues in quasi-contract for his
restitution interest, recovery is almost always limited to the pro-rata contract price, less the defendant's
damages for breach. [348]
3. Willful default: In many states, a defaulting plaintiff may not recover in quasi-contract if his breach is
"willful." [349]
Ex: Contractor agrees to build a house for Owner for $100,000. The K expressly provides that all walls
will be insulated with non-asbestos-based insulation. Contractor instead knowingly installs asbestos-based
insulation, in order to save $2,000 in material costs. Even though the resulting house has substantial
value, many courts will not permit Contractor to recover anything at all, on the grounds that his breach
was not only material but "willful," i.e., intentional and done for Contractor's financial advantage.
4. UCC gives partial restitution to breaching buyer: The UCC gives a breaching buyer a right to partial
restitution with respect to any deposit made to the seller before the buyer breached. Under 2-718(2), the
seller can only keep 20% of the total contract price or $500, whichever amount is smaller - the balance
must be
refunded to
the
breaching
buyer.
[350]