Contracts are designed to outline and establish the terms of an agreement between two parties. In the construction industry, contracts are extremely important because they plot the course of a project and help maintain accountability between the owner and the contractor. When both parties work together and appease the terms of a contract, projects tend to proceed without hesitation and the end product is typically satisfactory or better.
However, when one party breaches a contract, whether it is the contractor or the owner, projects become chaotic and very little is accomplished. In this article, the Florida construction attorneys at Cotney Construction Law will discuss the types of damages faced by contractors who breach a contract. For help with all of your legal needs including contract review, contact a Florida construction attorney.
Compensatory damages are the most common resolution for a breach of contract. Contractors who breach a contract will most likely be responsible for any unfulfilled terms related to the contract which can include the cost of hiring a new contractor to take your place if a court of law deems it necessary.
Restitution requires a contractor who has breached a contract to repay the owner. In other words, if an owner signs a contract for a two million dollar project with a contractor but the contract fails to complete any of the project, they will be responsible for returning all of the money. If the owner only distributes a portion of the total project cost (which is more common), the contractor will be responsible for repaying that specific amount.
Liquidated Damages and Nominal Damages
Liquidated damages are less divisive since they are already agreed to in the event of a contract breach beforehand. In other words, both parties recognize a potential breach of contract but feel comfortable proceeding with the project anyway. This is usually handled in a professional manner without the need for a drawn-out conflict. Nominal damages are awarded when a breach of contract occurred but neither party suffered significantly as a result.
When it comes to construction projects, there’s no guarantee that the owners first choice of contractor will be the best possible fit. In some cases, the owner may want to cut ties with the current contractor and hire a new one. Under quantum meruit, the owner would be responsible for compensating the original contractor for all completed work even though they failed to fully appease the terms of the original contract.
Remedies in Equity
Sometimes called “injunctive relief,” a remedy in equity occurs when the court orders one party to take action against the other such as canceling a contract, delivering goods, or performing a specific service promised in the contract.
When one party acts immorally or performs a reprehensible act against the other, the affected party can be awarded punitive damages. Punitive damages are meant as a punishment for the offending party.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.