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What are the types of construction contracts breaches?

On Behalf of | Jan 16, 2022 | Construction Contracts |

Because a lot goes on during a construction project, breaches of the contract sometimes occur. It could be something minor like a material delay or something major like subpar equipment. When a construction contract breach makes it into court, the judge assesses whether the issue is a material or non-material breach.

Material breach

A material breach is when someone strays far from the contract agreements. Using subpar construction materials is a material breach. If the contract specifies a certain material but the construction company uses an inferior material, then this counts as a major breach.

Non-material breach

Less serious issues are usually non-material breaches. An example is showing up a few minutes late. Any incident that doesn’t cause serious damage to the project is typically a non-material breach, which is also known as a minor breach.

In general, it’s not worth the time and money to pursue a lawsuit over a minor breach. You might not have the option to take the other party to court either, depending on the terms of your contract. You should check the contract to refresh your memory on how you agreed to handle disputes.

It’s common for construction contracts to have dispute resolution clauses like alternative dispute resolutions and Dispute Resolution Boards. Your contract may stipulate that you need to first notify the other party of your dispute and attempt to resolve it with them before pursuing litigation.

Types of damages for a construction contract breach

The three types of damages for construction contract breaches are compensatory, liquidated and punitive. Compensatory damages make up the damages that the other party is responsible for. Liquidated damages are contractual agreements on how much the responsible party will pay for damages that are difficult to calculate. In scenarios where the responsible party intentionally caused damage, you could receive punitive damages.

Construction contracts don’t always go exactly as planned. As long as the project still goes relatively smoothly without major issues, then most people don’t seek litigation.