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How Can I Figure Out Damages in a Construction Contract?
When one party does not uphold their part of the contract, the other party may need to work with damages ... ...



How Can I Figure Out Damages in a Construction Contract?

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Posted on: 09/17/21
When one party does not uphold their part of the contract, the other party may need to work with damages in order to get things back on track. Hopefully everything works out and both parties are able to uphold their part of the contract to avoid some of these problems. But how are damages going to be computed?

There are two different methods that a lawyer will be able to use to help compute damages in a construction contract. These include cost to complete and the diminution in value. A court will be able to help the parties figure out which of the two methods are the best based on the case that they see. 

The cost to complete method is going to help calculate out the damages for some contracts. This one is going to have the losing party pay the damages or replace or complete the project in a way that both parties can agree on. Many courts are going to use this method when the performance of the breach party is incomplete or defective so that the project can still get done. 

The courts can also choose the diminution in value method. This is going to require the party that is at fault to pay for the difference in the value between the project in its current condition and the project as it was specified inside of the contract. Let’s say that a home is built, but it is in breach of the contract terms. With the diminution in value method, the market value of the home when it is finished is going to be used along with the market value of the home that was outline in the contract. The difference between the two would be what the builder needs to pay for breaching the contract. 

Both of these options will work well, but it does depend on the contract and the amount of money at is at stake. The courts will take care of this along with the help of your construction lawyer. 

Understanding how construction law works can be difficult and is not something that everyone should do. When there is a dispute that comes up with your project and the work that you do with another party, it is a good idea to talk with an attorney to figure out what you can do about it. Damages are an especially difficult part because you need to figure out what the other party owes and you may need to try to find new ways to fix the issue as well. Working with a construction contract lawyer will make a big difference along the way. 


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