Paralegal Certification PrepContracts and Business LawHard
A paralegal is assisting with a case where a homeowner hired a contractor to remodel their kitchen for $30,000. The contract specified that the contractor would use 'high-grade oak cabinetry.' During the remodel, the contractor, without informing the homeowner, used 'standard-grade oak cabinetry' which cost $2,000 less than the specified high-grade. The homeowner discovered this after completion. The cost to replace the standard-grade with high-grade cabinetry is $8,000. What measure of damages is most appropriate for the homeowner?
- APunitive damages.
- BThe difference in value of the cabinetry ($2,000).
- CThe cost of completion/replacement ($8,000).
- DNominal damages.
Show answer & explanationAnswer & explanation
Correct answer: C. The cost of completion/replacement ($8,000).
In construction contracts, if a contractor deviates from specifications and the defect can be remedied without undue economic waste, the preferred measure of damages is the cost of completion or replacement. Here, replacing the cabinetry is feasible, and the $8,000 represents the cost to bring the performance to the contracted standard.
Why the other options are wrong
- A. Punitive damages are rarely awarded in contract cases and primarily reserved for egregious conduct, not simple breach of specification.
- B. While the difference in value is a measure of damages, it's typically used when the cost of completion would result in economic waste or disproportionate expense compared to the benefit.
- D. Nominal damages are awarded when there is a breach but no actual financial loss, which is not the case here.
Damages for Construction Breach
For breach of a construction contract, damages are typically measured by the cost of completion or replacement to bring the work into conformity with the contract, unless this would result in unreasonable economic waste.
- Cost of completion is preferred unless it's disproportionate.
- Diminution in value (difference between value of promised and delivered) is used if cost of completion is wasteful.
- Goal is to put the non-breaching party in the position they would have been in.
Memory trick: Remedies: 'S.P.E.C.S.' (Specific performance, Punitive, Expectation, Consequential, Statutory).