Buyers, sellers, general contractors, subcontractors, builders, architects, and consultants always create some form of contract when working on a construction project. Upon agreeing on a contract, both parties are obligated to perform the promises made in the contract, but if one party breaches the contract, the other party may sue for damages to compensate for any losses suffered as a result of the breach of contract.
How Are Damages Calculated?
Damages are calculated in two different ways when it comes to construction contracts:
- Cost-to-complete: This requires the breaching party to pay damages to replace or complete the project the parties agreed upon. Courts ordinarily use this when the breaching party’s performance is defective or incomplete.
- Diminution-in-value: This requires the breaching party to pay for the difference in value between the completed project and the project specified in the contract. This measure is used only when considerable execution of the contract occurs.
In addition, the non-breaching party can recover consequential damages, liquidated damages, nominal damages, and specific performance damages.
Are There Limitations to Recover Damages?
Yes, there are several limitations when it comes to recovering damages for a breach of a construction contract, including:
- Foreseeable damages: The breaching party must be able to foresee that the damages may likely occur
- Certainty: Damages must be proven with certainty
- Duty to mitigate: The non-breaching party has a duty to not amplify the loss
How a Construction Attorney Can Help
If you believe you are entitled to damages related to a construction contract, our Reno construction lawyers at Viloria, Oliphant, Oster & Aman L.L.P. can ensure you recover everything that you are owed. On the other hand, if you are being sued for damages, our attorneys can ease the amount of damages you have to pay. Let us help you better understand what to expect under any contract, or what exactly happened to cause the breach of contract.