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Measure of Damages for Breach of Construction Contract

Mon 27th Sep, 2021 Industry News

If you are involved in a construction dispute concerning a breach of the construction contract, one of the most important considerations involves the measure of damages (because a civil dispute is generally all about the damages!).

A recent Florida 4th DCA case confirmed 2 ways to measure such damages:

1) Benefit of the bargain damages –> This is the difference between the contract price and the reasonable cost to perform/complete the contract. This is probably the more common way such damages are measured. If I have a contract for $1M and I end up paying $2M to perform and complete the same work, my claimed damages are $1M minus any items of potential betterment. (This is simplistic way to look at this because, in reality, you are looking at the amount in excess of the remaining contract balance to perform/complete the work under the contract.)

2) Damages under a claimed total breach –> This is when you are essentially treating the contract as void and are looking for damages to be restored to the position you were in prior to entering into the contract. This was the measure of damages used in this recent 4th DCA case where an owner paid a contractor $90,000 prior to terminating for a breach, it was determined the contractor only performed $49,150 in work (quantum meruit value of work contractor performed), so the owner was entitled to the $40,850 difference as an over-payment.

By David M. Adelstein