What does restitution entail in contract law?

Restitution in contract law involves the restoration of parties to their original positions before a contract was made. This concept is particularly relevant in cases where a contract is rescinded, breached, or otherwise found to be unenforceable. The goal of restitution is to prevent unjust enrichment, ensuring that one party does not retain a benefit at the expense of another when an agreement fails.

By restoring the parties to their pre-contract state, restitution aims to balance the interests of both sides. For instance, if one party provided a service or item and the contract is deemed void, the other party may be required to return the benefit they received or compensate for it in some way. This understanding of restitution is essential for recognizing how legal frameworks seek fairness in contractual relationships.

The other options, while related to different contract concepts, do not accurately reflect the principle of restitution. For example, a new agreement reflects a modification rather than a return to original positions, monetary compensation without contract cancellation pertains more to damages, and reaffirmation of original contract terms implies continuing the contract as is, rather than seeking the return of initial circumstances.