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Construction Law Final > Contractual Remedies > Flashcards

Contractual Remedies Flashcards

1
Q

Contractual Remedies

A

1) Damages

2) Quantum Meruit

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2
Q

What is the usual remedy for breach of contract?

A

Damages

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3
Q

General rule for damages

A

injured party should be put in the position they would have been in had the breach not occurred

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4
Q

What do you need to prove for damages in contractual remedies?

A
  • Causation

- Martel: not being treated fairly didn’t cause them damages (no proof they would have got the contract)

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5
Q

When it comes to assessing damages

A

Courts have not come to a united front

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6
Q

2 general options for assessing damages

A

1) damages in the amount equal to the cost of repair and reinstatement
2) damages in the amount equal to the lower measure of diminution of value

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7
Q

damages in amount of repair and reinstatement includes

A

in extreme cases, the cost of demolition and rebuilding of a structure

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8
Q

damages in the amount equal to the lower measure of diminution of value

A

the value of the building project would be the value before the causal breach and value afterward, and the difference in those values would be the quantum of the damage award.

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9
Q

Ruxleigh Electronics and Construction Ltd v Forsyth

A
  • Reasonableness is central
  • Damages need to reflect the loss sustained
  • Damages are compensatory and not designed to provide gratuitous benefit to injured party
  • When claiming reinstatement value of damages intention to fix damage is extremely important
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10
Q

Extending Ruxleigh to project abandonment

A

1) Will need to look at actual damage suffered AND
2) The intention of the injured party with respect to demolishing the partially completed work and starting again, as this will go to the true value of the loss

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11
Q

Ruxleigh reasonableness analysis

A

In making that assessment, reasonableness will be of paramount importance

1) Is the damage award sought reasonable?
2) Is the intention to demolish and rebuild reasonable?

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12
Q

Owner generally entitled to

A

Amount to Rectify Defects

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13
Q

General approach to damages for breach of building contract

A

reinstatement of the work

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14
Q

When are courts critical to using the General approach to damages for breach of building contract

A
  • When it is extremely disproportionate to do so

- Where cost of rectification is excessive compared to the nature of the defect

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15
Q

What is normally a good measure of reinstatement amount?

A

Cost of making good a defect (will not necessarily help though)

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16
Q

What is the ordinary measure of reinstatement amount?

A

difference between the value of contracted for premises and the value of what they got

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17
Q

What is the proper measure of damages where a contract is abandoned by the builder?

A

the reasonable cost of completion incurred over and above the contract price

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18
Q

Abandoned- why over and above the contract price?

A

If it was just cost of completion it would not be the total amount of their loss

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19
Q

Wasted expenditures

A
  • Recoverable as damages

- the costs of unsuccessful but reasonable attempts to rectify the situation

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20
Q

Total cost claim

A

claim in which the causal connection between the actions or omissions by the owner alleged to have caused damages and their consequences are not fully proven

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21
Q

Availability of total cost claims

A

Only available for contractors/ subcontractors

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22
Q

How to calculate total cost claim

A

Contractor compares the total costs actually incurred against the contract price and claims the difference

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23
Q

Particular parts in total cost claims

A

No particular part of the claimed costs overrun is attributed is attributed to any particular compensable event

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24
Q

Total cost claim only available if

A

No other option (no other way to compute damages is feasible)

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25
Not entitled to total cost claim if
you could identify and link the particular loss to a particular action
26
Condition for total cost claims
None of the additional costs can be caused by the contractor’s own acts or inefficiencies
27
Modified total cost approach
Contractor claims total cost actually incurred minus the contract price BUT claimed costs are adjusted to reflect the portion of total cost overrun that is attributable to the contractor
28
Quantum Meruit
Recovery based on an implied promise by the owner to pay for work performed for its benefit without legal contract
29
2 forms of Quantum Meruit
1. Contractual Quantum meruit | 2. Restitutionary Quantum Meruit
30
Contractual Quantum meruit
Payment of a reasonable price for contracted work
31
When is Contractual Quantum meruit available?
where parties have either not fixed a contract price or the contract price is deemed to have been replaced by another contract without a price
32
Example of deemed to be replaced (Contractual Quantum meruit)
unit price contracts where there is more than 20% than estimate by industry standard, but if you hadn’t repriced it
33
elements to be successful for Contractual Quantum meruit
P needs to prove: 1. That there was a contractual relationship between the parties 2. The parties agreed that certain work was to be done but without agreement on the price to be paid 3. The defendant’s accepted the work 4. Both parties had, or should have had, an expectation that the work was not being rendered gratuitously 5. The payment sought is reasonable renumeration for the work done (AKA the merited quantum- what amount of $ is merited for the work done?)
34
Restitutionary Quantum Meruit
Applied where the defendant’s liability is quasi-contractual (in the absence of a consensual, express or implied agreement)
35
Where does Restitutionary Quantum Meruit come in?
Comes in where there is either no contract or the contract is either inapplicable or cannot be maintained (no contractual relationship)
36
Elements for Restitutionary Quantum Meruit
Plaintiff needs to demonstrate that they are entitled to payment for work performed for the benefit of the defendant
37
Examples of circumstances where RQM comes up?
1) Contractor performed work without formal contract where the contract has been abandoned or fundamentally changed by the owner such that the original contract is no longer applicable 2) Work performed pursuant to a contract but not sufficient to satisfy performance obligations under that contract (where performance is a condition precedent to payment)
38
For RQM to be available need
needs to have been a request by the owner or an agent of them for the work (needs to have asked for it)
39
Request by owner or agent (RQM)
Either express or implied
40
Ways to get around requirement request (RQM)
- Owner accepts the work | - Silence in light of performance can be consent to have value added in certain circumstances
41
Reasonable amount (QM)
The amount awarded is a reasonable amount the work is worth
42
What can and cannot factor into Reasonable amount (QM)
- Lost profit doesn’t factor into this analysis | - A fair Profit margin can
43
Repudiation
common law doctrine that allows a party to treat the contract as terminated, due to breach egregious enough to deny the substance of what was contracted for
44
Quantum Meruit upon Repudiation?
When the contract has been repudiated the innocent party (ex: contractor) can advance a claim of quantum meruit
45
What basis can the claim be on for Quantum Meruit upon Repudiation?
- on the basis of work actually performed and equal to a reasonable payment for that work - Any deficiencies in work at time of repudiation are deducted - No account needs to be taken for owners cost to complete the work
46
What about contractor who completes in the face of repudiation?
A contractor who elects to complete a contract in the face of repudiation will not be able to collect in quantum meruit basis
47
Other heads of damages
1) Lost profit 2) Mental distress damages 3) Punitive damages
48
Lost profit
Awarded where the injured party can show that a specific contract was lost as a result of breach of contract
49
Lost profit needs to be proven
on a balance of probabilities
50
Cases with less complete information that still can get lost profit
- needs to be shown that it is possible that contracts have been lost because of the breach and that it is probable that it would have materialized had the breach not occurred - Don't need to show 100%
51
Plaintiff needs to show for lost profits
reasonable chance of profits rather than speculative chance of economic gain (again certainty not required)
52
Damages for mental distress available where
Damages for mental distress are available for breach of contract where there is a “wanton or reckless breach” of such character that “the promisor had reason to know when the contract was made that a breach would cause such suffering, for reasons other than pecuniary loss”
53
Mental Distress Damages breach must cause
damage to injured party more than just financially
54
Mental Distress Damages only available...
Only available for breach of contract where peace of mind is the very matter contracted for
55
Ex of contract where peace of mind is the very matter contracted for
Holiday or insurance
56
Application of Mental Distress Damages to home renovation
- Won’t apply to home renovation | - Might be different if what you are contracting for is security measures in your home
57
Hadley v Braxendale
- Mental distress damages - Reasonably foreseeable - If they knew or ought to have known one contracting party had a mental disorder for which breach would cause mental distress such damages may be recoverable
58
Thin skull doctrine application
- Not applicable in contracts cases - In torts you take them how you find them - In contracts the parties bargain with each other and are made aware of and agree on obligations and risks they are undertaking
59
Basis for Mental Distress Damages is
what was in the reasonable contemplation of the parties
60
Cost of preparing claim
- Not a head of damage | - Would be accounted for in request for cost if you win
61
Punitive Damages
awarded against a defendant in exceptional cases for malicious, oppressive or high-handed misconduct that offends the court’s sense of decency
62
Punitive Damages bear no relation to...
what the plaintiff should receive by way of compensation
63
Punitive damages designed to
punish the offender
64
Public element to punitive damages
deterring others from acting in an alike manner
65
When are punitive damages available in breach of contract?
where conduct complained of is an actionable wrong
66
Punitive damages only awarded when...
general and aggravated damages are still insufficient to achieve the goal of punishment/deterrence
67
Aggravated damages
- Compensatory - Take into account intangible injuries - Frequently covers the same conduct as punitive
68
Circumstances Aggravated damages awarded in
circumstances of high-handedness or wilful or reckless indifference to the plaintiff’s rights
69
Difference between aggravated and punitive
Aggravated are not necessarily malicious or high-handed (similar conduct as punitive but are usually with respect to intangible injury such as mental distress and hurt feelings)
70
Duty to mitigate
The plaintiff cannot reasonably recover damages that could have been avoided by their own mitigation efforts
71
Standard of mitigation
Mitigation is not a standard of perfection but reasonable steps to mitigate need to be taken
72
What about when mitigation efforts go wrong?
If they take reasonable steps they can recover the cost of steps even if their efforts made it worse
73
Why cover when mitigation goes wrong?
we want to encourage people to at least try to mitigate and if we insist on a duty to mitigate we cannot hold people to a standard of perfection
74
Application of Ruxleigh to mitigation in abandonment
- Where a contractor or design pro abandons work after having done a substantial part of it, the owner cannot recover the costs of having all the work entirely redone by a different contractor - Have to be reasonably
75
Mitigating workforce in abandonment
- Hiring new workforce not always contrary to mitigation - Owner does not fail to mitigate if it hires a new GC instead of acting as GC itself if there is no evidence the owner has sufficient experience to be GC - Completing owner doesn't have to use former GC's subs

Construction Law Final (10 decks)

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