Assume Paul gets his $100,000 of restitution damages, and Fly-By-Night gets its $300,000 of restitution damages.
This is just the result we want. Both parties receive compensation that puts them in as good a position as they would have been in had the contract been performed as promised.
In describing the Fly-By-Night example, we did not use the concept of a material breach. Now we introduce that concept into the example.