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Does Restitution for Wrongdoing Give Effect to Primary or Secondary Rights?

There are two main and quite distinct contractual interests or rights constitutive of a contract. First, the interest in securing the contracted-for performance; secondly, the interest in ensuring, if that performance is not completely (but substantially) secured or not secured at all, that one is not left worse off as a result thereof. The claimant can bring a claim to give effect to his performance interest and/or can bring a claim to give effect to his compensation interest. It can be argued, however, that in some cases both the claimant’s performance interest and his compensation interest cannot be protected, and the defendant has obtained a profit from his wrongful breach of contract. This article suggests that in such cases a secondary right does not always mean that the defendant who infringes a primary duty has to make good the claimant’s pecuniary loss. It may require the defendant to surrender to the claimant the profits made from his wrongful breach. In such a case, it is a secondary right to restitution rather than compensation. The claimant’s compensation interest is here replaced with a restitution interest. This article explains why the defendant in such cases should surrender to the claimant, rather than the state (or anyone else), the benefit obtained through his wrongful breach of contract. Three additional scenarios will also be envisaged to capture the wide range of possible outcomes that may result from the defendant’s breach of his primary duty to perform and how they should be tackled. First, the claimant’s primary performance interest can no longer be protected and the defendant has caused a financial loss to the claimant and obtained a profit from his breach of contract. Second, a specific performance or cost of cure award addresses substantially the claimant’s primary performance interest, but despite that, the defendant has obtained a benefit from the breach without causing the former any financial loss. Third, a specific performance or cost of cure award addresses substantially the claimant’s primary performance interest, but despite that, the defendant has caused a loss to the claimant and obtained a profit from his breach of contract.