Excavate n' Fill, Inc., enters into a contract with Fred to fill and landscape an abandoned quarry on Fred's land. Fred advances Excavate n' Fill 10 percent of its cost. The parties rescind the contract. Excavate n' Fill's refund of the payment is
A) a penalty.
B) liquidated damages.
C) restitution.
D) reformation.

Question

Excavate n' Fill, Inc., enters into a contract with Fred to fill and landscape an abandoned quarry on Fred's land. Fred advances Excavate n' Fill 10 percent of its cost. The parties rescind the contract. Excavate n' Fill's refund of the payment is
A) ​a penalty.
B) ​liquidated damages.
C) ​restitution.
D) reformation.​

Quizplus · Accepted Answer

Restitution is the appropriate remedy in this scenario, as it is a return of the advance payment made by Fred. Restitution is the restoration of the parties to their pre-contract positions, and is intended to undo any unjust enrichment that may have occurred as a result of the contract. A penalty refers to a sum of money imposed as a punishment, while liquidated damages are a pre-determined sum that can be recovered by a party in the event of a breach. Reformation refers to a change made to a contract to reflect the parties' intentions, and is not applicable in this scenario.

Excavate N' Fill, Inc