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Lyon v. Belosky Construction, Inc.

    Brief Fact Summary.

    Lyon brought suit for breach of contract against Belosky Construction, Inc. (Belosky) when Belosky failed to construct the home in accordance with specific design drawings.

    Synopsis of Rule of Law.

    The proper measure for damages in breach of a construction contract is the difference between the amount owed on the contract and the cost to complete the job or the different between the amount owed on the contract and the cost to replace the defective construction.

    Facts.

    Lyon contracted with Belosky Construction, Inc. (Belosky) to build a house in accordance with specific design drawings. After the home was completed, Lyon realized that the roof was constructed in accordance with the drawings, among other issues. Lyon sued for breach of contract and the Supreme Court of New York granted judgment in favor of Lyon with the amount necessary to bring the roof in compliance with the drawings, $73,182.66. Belosky appealed.

    Issue.

    What is the proper measure for damages in breach of a construction contract?

    Held.

    Yes. The Supreme Court of New York’s judgment is affirmed. It is clear that Belosky breached the contract but Belosky also substantially performed. The court determined that the damages award is not an unreasonable economic waste.

    Discussion.

    The proper measure for damages in breach of a construction contract is the difference between the amount owed on the contract and the cost to complete the job or the different between the amount owed on the contract and the cost to replace the defective construction. This is not the proper measure of damages if the contractor substantially performed and fixing the defect would be considered economic waste.


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