December 2007

Determining damages

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For breach-of-contract claims, outcomes depend on how courts measure damages

by Stephen M. Phillips
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Consider this: A building hasn't experienced any leaks, but its owner files a breach-of-contract claim against you based on a consultant's report. The consultant claims you failed to comply with contract specifications and your workmanship was defective. Are you liable to reroof the building or pay for the cost of reroofing based on the breach of contract?

Or consider this: After selecting the desired shingle color from samples you present to him, a homeowner makes a claim against you because the installed shingles are not uniform in color and the disparity is apparent from certain angles depending on the time of day and how sunlight strikes the roof. Can the homeowner recover from you the cost of removing the recently installed shingles and reroofing the home?

The answers to these questions are based on the law of damages. Specifically, the legal issue is: What is the measure of damages applicable to an owner's claim?

There are two basic approaches courts apply to measure damages for breach of a construction contact. Damages can be calculated based on the cost to repair the contract deficiency or diminution in value of what was constructed. In other words, an owner may be entitled to the cost of correcting the deficiency in construction or the difference in value between how the building was built versus how the building was to...

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