Chapter 4
As indicated in the prior chapter, the difference between a bargain and a
contract is that breach of the latter will subject the breaching party to legal
remedies, primarily for damages. Chapter 4 addresses contract remedies.
The chapter divides into two parts: an introduction to the law of contract
damages generally, then focus on damages claims that are peculiar to
construction disputes.
With regard to contract damages generally, compensatory damages are
measured by the benefit of the bargain. Yet any damages calculation must be
Any review of compensatory damages should distinguish between the
reasonable contract expectations of the owner and that of the contractor. What
injuries has each suffered, and how are those interests quantified?
Starting with Section 4.6, the chapter shifts to discussion of contract damages
specific to construction disputes. This part should be studied carefully. It is at
heart of construction claims today.
From the contractor’s perspective, the most important claims are for lost
productivity and delays. How does one prove damages? The different formulas
1.) What are the four types of judicial remedies for contract breach?
2.) What are the three primary things a court judgment seeks to do for compensatory
damages?
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a. The court judgment seeks to: (1) put the injured party in the position it would
have been in had there been no breach, or (2) restore the injured party to the
position it occupied before performance began, or (3) prevent the breaching
party’s unjust enrichment.
3.) In regards to limits on recovery, what are the four primary factors that must be met
or proven for a claimant to receive compensation?
4.) What are the five principal claims made by contractors against owners?
5.) If a contractor had an original contract price of $800,000, had already expended
$210,000 in part performance, estimates that the cost of completion would be
$625,000 and has already received $175,000 in progress payments, how much
would that contractor be entitled to in damages if you were to use the reasonable
cost of completion formula?
6.) If the data is available, which is the best method of proving damages?
7.) Under the Eichleay formula, what three things must the claimant prove in order to
use this formula?
8.) Assuming actual data is not available, what are the two techniques that are used for
a contractor to measure productivity losses for a claim?
9.) What is the Single Recovery Rule?
10.) What is “economic waste” and what role does it play in measuring the
owner’s damages?