Types of Damages in Construction Contract

When it comes to construction projects, there’s bound to be some sort of disagreement or conflict along the way. This is especially true for larger residential projects, as homeowners can be quite critical and discerning.

Because of this, a contract can be a contractor’s best friend. This legal document outlines the terms and conditions of a project and determines a contractor’s remedies in the event of a dispute. This contract needs to be solid, as a contractor can stand to lose a lot of money if the document isn’t airtight.

Here’s a look at some of the most common types of damages a contractor could receive and what they mean.

Direct Damages

Direct damages in a construction contract refer to the losses or costs that directly result from a breach of the contract by the contractor. These damages are typically quantifiable and intended to compensate the non-breaching party for the actual harm or loss caused by the breach. Some common costs include cost of completion, repair costs, replacement costs, and loss of use.

Consequential Damages

Consequential damages are harder to calculate. They refer to losses that result indirectly from the act. These can include economic losses that occur as a consequence of the initial breach of contract or other wrongful act. Some examples include lost profits due to delayed project completion, additional financing costs due to extended project timelines, and increased operational costs from not having a facility available on time.

Liquidated Damages

Liquidated damages in a construction contract are pre-determined sums agreed upon by both the owner and the contractor to be paid as compensation for specific breaches, such as delays in project completion. These damages are intended to represent a genuine estimate of the losses that might be incurred by the owner if the contractor fails to meet the contractual completion date. An example of this would be a lump sum of $25,000, or a daily rate of

$500 for each day the project remains incomplete after the agreed-upon completion date.

Nominal Damages

Nominal damages are a small sum of money awarded to a plaintiff in a lawsuit to recognize that a legal wrong has occurred, even if there was no substantial harm or financial loss. They are awarded in cases where the non-breaching party wants to still hold the other party accountable.

In these cases, the court may award nominal damages to acknowledge that the contract was breached. The award may be a few dollars or maybe $100, but not much more than that.

Contact Us Today

Construction contracts can seem highly complicated. Everyone should be familiar with what these contracts contain so that they are all on the same page in terms of possible damages for a breach, delay, or other issue.

Seek legal help from the Florida construction contract lawyers from Linkhorst Law Firm. We are intimately familiar with construction contracts and can help you understand your rights and obligations. Schedule a consultation today by filling out the online form or calling 561-626-8880.

Source:

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