Construction Law

Contract Damages - "Betterment", "Pain and Suffering", and Being Made Whole

Both clients and lawyers often misunderstand exactly what may be recovered as damages in contract cases. It is critical to understand recoverable damages to be able to properly analyze your position and make intelligent decisions. To develop this understanding, we will first discuss the basic purpose of contract damages. We will then discuss the concept of betterment and provide some examples of its application to construction litigation. Finally, we will discuss "pain and suffering".

The Purpose of Contract Damages
The purpose of damages in a contract case is to "make the plaintiff whole". When a defendant breaches a contract, the plaintiff is entitled to recover the amount required to place the plaintiff in the position they would have occupied upon proper performance of the contract.

"Betterment"
The plaintiff in a contract case is not entitled to recover a windfall. The plaintiff should not be placed in a better position than they would have occupied with proper contract performance. Damages which would place a plaintiff in a better position than they would have occupied upon proper performance are sometimes described as "betterment" for the plaintiff.

To understand "betterment" in practice, we present a typical hypothetical situation. The hypothetical architect omits an important element of construction from the plans and specifications. We assume the architect is liable in negligence or breach of contract for that omission. The omission is discovered during construction of the project and results in the architect issuing supplemental information to the contractor. The contractor claims it is entitled to more time and money flowing from the added work. The parties execute a change order adding time and money to the contract.

Often, the owner will present a claim to the architect for the extra time and money in the change order for the omitted design element. Generally speaking, the owner should not be entitled to recover the full value of the change order. If the architect had performed its contract properly, the item would have been included in the original construction documents. The contractor would have included that item in its bid. The owner would have paid for the work.

The owner's claim for the work for free would represent betterment. Upon proper contract performance, the owner would have paid for the work. Proper proof of contract damages would instead require the plaintiff to prove that the late addition of work resulted in increased expenses in some fashion. Those increased expenses over the amount the work would have cost in the bid phase would represent actual damages rather than betterment. Naturally, proof of that premium is easier to sustain when the omission is discovered at a point required destructive removal and replacement of work.

Pain and Suffering
Pain and suffering are recoverable elements in a personal injury case. Interestingly, many clients want to claim "pain and suffering" for the aggravation flowing from a breach of contract situation. Pain and suffering damages are not recoverable for breach of contract under almost any conceivable situation. Certainly, the states in the mid-Atlantic region view pain and suffering damages in an extremely skeptical fashion in contract cases.

Conclusion
With an understanding of the basics of contract damages, you can begin to realistically analyze what damages you may recover or face in your case. That understanding helps translate to intelligent decision-making before litigation.

Timothy R. Hughes, Esq., is the principal of the Northern Virginia law firm of Hughes & Associates, P.L.L.C., www.hughesnassociates.com. He specializes in construction litigation, corporate and business related representation, and complex civil litigation. He may be reached at tim@hughesnassociates.com, or by phone at (703) 671-8200.