A contractor entered into a written agreement to build a shed for a homeowner for $20,000. Partway through construction, the contractor realized they had underbid the project and ran out of funds. The contractor notified the homeowner that they could not complete the project. The homeowner hired another contractor to finish the shed, spending $9,000 for completion. The partially completed shed had a value of $10,000, and the homeowner had paid the contractor $7,000 before construction stopped. What amount, if any, is the original contractor entitled to recover despite breaching the contract?
The contractor is entitled to recover $2,000, representing the difference between the $9,000 cost of completion and the amount previously paid by the homeowner.
The contractor is entitled to recover $10,000 for the value of the partially completed shed.
The contractor is not entitled to recover anything because they breached the contract.
The contractor is entitled to recover $3,000 in restitution for the value of the benefit conferred on the homeowner, net of payments already received.
The original contractor, despite breaching the agreement, may claim remuneration under the principle of restitution, which prevents unjust enrichment of the non-breaching party. In this situation, the contractor can seek compensation for the value of the benefit they conferred upon the homeowner, which is the value of the partially completed shed ($10,000). However, any amount already paid by the homeowner ($7,000) must be deducted from this sum. Therefore, the contractor is entitled to $3,000 in restitution. The incorrect answers fail to consider the proper calculation of restitution or misstate the contractor's rights under contract law.
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How is the value of the benefit conferred determined?