Q&As

Is there any case law or guidance on claiming damages (including loss of profit) in a defects claim where the parties are using an NEC contract?

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Published on LexisPSL on 28/11/2018

The following Construction Q&A provides comprehensive and up to date legal information covering:

  • Is there any case law or guidance on claiming damages (including loss of profit) in a defects claim where the parties are using an NEC contract?

When determining what damages an employer may claim, it is necessary to consider general principles regarding damages. As set out in Practice Note: Quantum in construction claims, the normal function of damages for breach of contract is compensatory—the aim is to compensate the loss suffered by the claimant 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.

The extent to which a type of loss, such as loss of profits, may be recoverable is primarily governed by the concepts of causation and remoteness (although other factors, such as whether the claimant has mitigated its loss, will also be relevant). Accordingly, a claimant must first show:

  1. there is a causal link between the breach (eg the defect) and the loss suffered

  2. that the loss is not too remote

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