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Contract breaches and damages in the construction industry

The biggest cause of litigation in the construction industry is contract disputes. A common source of such conflict is breach of contract in which one party does not fulfill its responsibilities as outlined in the contract. In some cases, the wronged party may receive damages.

There are various types of breaches and damages, and they depend on the circumstances of your case. Learn more about breach of contract and construction disputes.

Types of contract breaches

The most common type of breach is the other party failing to complete its end of the contract. It may be a partial or total incompletion, and it may have been unintentional or due to an outright refusal to comply. The severity of the breach and the damages you may receive depend on if the breach was material or nonmaterial.

A material breach is one in which the party defaults on a substantial portion or significant aspect of the contract. This may affect the outcome of the project or may prevent you from performing your contractual duties. With a material breach, you will not have to uphold your end of the contract.

A nonmaterial breach is when the party only fails to perform some or a minor part of the contract, including making a small, fixable mistake. In this case, you will still have to fulfill your responsibilities. The court will decide on the type of breach based on certain guidelines.

Types of damages in breach of contract disputes

Any type of contract breach will result in your ability to sue for damages. However, the type of breach will determine the kind and amount of damages you may receive. Some of these include the following:

  • Direct: Also known as loss in value, it covers the remaining cost of completing the contract.
  • Liquidated: These are damages you and the other party agree to when creating the contract.
  • Nominal: When the harm done is minimal, the court only awards you a small, specific amount of money.
  • Punitive: The purpose is to punish the breaching party for purposely doing something egregiously unethical. It is up to a judge to decide whether to award punitive damages.
  • Special: This category includes consequential and incidental damages specific to your situation. They can cover loss of profits, reputation or time. This type can be complex to determine.

In addition to awarding you damages, the court may cancel your contract or force the breaching party to perform its obligations. The best way to handle your breach of contract is to hire a construction litigation attorney who can help you determine the type of breach and the compensation you may be entitled to receive.

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