Contract Remedies: Specific Situations: Construction Contracts

Question 1

In general, what are the types of remedies available for breach of construction contracts (3) ?

Answer 1

1. Money Damages;
2. Restitution
3. Specific Performance

Question 2

With regards to money damages for breach of a construction contract, what is the measure of damages if OWNER breaches contract to BUILDER?

Answer 2

If OWNER breaches K to BUILDER:

If K is COMPLETED –> contract price

If K is PARTIALLY EXECUTORY –> [contract price] less [cost of completion]

If K is WHOLLY executory –> lost profits

Question 3

With regards to money damages for breach of a construction contract, what is the measure of damages if BUILDER breaches contract to OWNER?

Answer 3

If BUILDER breaches K to OWNER:

If builder BREACHES but has SUBSTANTIALLY PERFORMED –> owner recovers [cost of restoration] UNLESS this would produce economic waste.
IN THIS CASE –> recovery is limited to diminution in value

If builder MATERIALLY BREACHES –>
[cost of completion] LESS
[payments due] PLUS
[compensation for delay]

Question 4

What can BUILDER do/get in restitution if OWNER breaches K to builder?

Answer 4

if OWNER breaches –>

• Builder can RESCIND; +
• recover the value of benefit conferred (not limited to k price in most states)

Question 5

What can OWNER do/get in restitution if BUILDER breaches K to OWNER?

What can BUILDER get in this scenario?

Answer 5

If BUILDER breaches –>

• Owner usually CAN’t get restitution (bc there are usually no payments made in excess of benefits received)
• BREACHING BUILDER can usually get restitution of benefits conferred in excess of owner’s damages (limited to contract rate)

Question 6

What is the general rule w regards to specific performance and construction contracts?

Answer 6

Traditionally –> supervision problems precluded specific performance on construction K’s

Today –> more courts are willing to overlook feasibility problems