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If a court orders the agent to return funds earned as a result of breaching their duty of loyalty to the principal, this is known as Disgorgement.
What is Disgorgement?
- A remedy demanding the forfeiture of any profits made as a result of an individual's illegal or unjust activity by a person who benefits from such conduct.
- This solution's main goal is to stop unfair enrichment contracts. In order to prevent unfair enrichment, the court may order a defendant to forfeit whatever income they made as a result of wrongdoing or illegal activity.
- This equitable remedy is called disgorgement.
- The plaintiff need not have endured any sort of damages in order to receive disgorgement.
- The defendant must have been negligent in order for the plaintiff to seek disgorgement for the harm sustained.
- Disgorgement is an option for a contract breach, but only under unusual circumstances
Hence, Disgorgement is the legal term for when a court compels an agent to repay the money they earned for failing to uphold their duty of loyalty to the principal.
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