May 11, 2021
As a working individual, you must have known the term ‘breach of contract’. A breach of contract occurs when one or more parties to a commercial agreement cannot meet all the terms and conditions mentioned in the contract. The different contracts include trade contracts, franchise agreements, license agreements, property agreements, and mortgage agreements. Say you have agreed to a contract to construct an outhouse in your premises with a contractor for an exchange of $5000. You have paid that amount in advance, but the contractor has stopped the work all of a sudden. That will be termed as a breach of contract. So we always recommend contacting breach of contract lawyers to handle such cases.
Ways in which damages are calculated in construction contracts?
In the case of breach of construction contracts, there are usually two ways breaches of contract lawyers Perth use to calculate damages. Both of the computing methods are valid. Depending on various facts related to the case, the court decides which way they should use. These two methods are:
- Cost-to-complete: To use this method, the breaching party should pay the required amount to complete the construction project in the agreement. Then the court will use this method if the contractor did not meet the job. This is also known as incomplete or defective performance.
- Diminution in value: This is about lowering in value because of a breaching incident. Here, the breaching party should reimburse the other party to compensate any lost value because of the breach. This value is calculated by deducting the cost of the finished project or the value of the current property and the cost mentioned in the original contract. You can understand it from a simple example. You enter into a house construction contract where the agreement does not finish the job. Then, you are hiring another contractor to complete the unfinished project. In that case, you will get paid the difference between the amount stated in the original contract and the house’s market value. If you do not bother to hire another contractor, the breaching contractor is bound to pay that amount. Courts usually use this calculation if there has not been substantial performance.
What are the different types of recoverable damages?
Various types of recoverable damages are available for breaches of contract. Some of the common examples of recoverable damages include:
- Consequential damages: Consequential damages are those things that remain outside of the contract. These damages refer to the losses that occur outside of the agreement due to the breach. Typical damages include lost profits, lost revenue, lost time, etc. You may find a common language in contracts saying a party cannot receive consequential damages. So, whether you can recover these consequential damages will entirely depend on your situation and the language used in your contract.
- Liquidated damages: Unlike consequential damages, liquidated damages are the damages that are stated in the contract. When it becomes hard to find out the exact amount of damages, these damages are used.
- Nominal damages: These damages refer to minimal awards, usually given in a few dollars. When there is no monetary loss is found, nominal awards are used. Still, the court wants to establish the point that the breaching party has committed some wrong. It also reflects the legal right that the party usually holds.
- Punitive damages: These damages are used to give punishment to the person who breached the contract. It acts as a penalty for the behavior. It is used when the breach was done with an intention, or the actions were done terribly. The courts do not reasonably use punitive damages unless the arisen situation is extreme.
- Specific performance: Specific performance indicates that the breaching party must adhere to the legal obligations mentioned under the contract. The contract may be of finishing a construction project or supplying materials. Courts usually do not use this because the relationship between the two parties becomes already bitter when the case reaches the court. It is generally used when there is something unique present in the contract.
What help can an lawyer deliver?
If you face serious legal issues in your construction contract, we recommend consulting with a business lawyer from your area. Commercial lawyers Perth usually offer numerous benefits as they can help you recover maximum damages for a construction contract breach. If you are a contract and get sued, a lawyer can help you give suggestions about potential defense. They may be able to reduce the amount you might have to pay. And, it is best to contact experienced and skilled solicitors.
In the end
For queries and necessary help regarding breaches and recoverable damages in Perth, you may search on the internet. Many firms can provide one of the best commercial lawyers to give you proper guidance.