Damages and exclusions

Due to the nature of construction projects, it is common for parties to raise claims relating to breaches of contract or negligence. As a result, the question of damages for these types of breaches, and how to minimise liability if faced with a claim, is extremely important.

Damages

The normal function of damages for breach of contract or negligence is compensatory—ie the aim is to compensate the innocent party for its true loss and place it in the same position, so far as money can do so, as it would have been in had the contract been performed or, in tort, as if the wrong not been suffered. Notwithstanding this difference in the contractual and tortious measures of damages, in many cases, the same result will follow from the application of either measure.

Practice Note Quantum in construction claims highlights some of the key considerations that parties to construction contracts should consider when formulating the quantum aspects of a claim for damages—including issues of causation and remoteness, the use of global claims, mitigation and betterment, contributory negligence, contractual restrictions or exclusions and supporting quantum

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