Construction contracts can get incredibly detailed and confusing. It is common for mistakes to be made - especially if neither party is using an attorney. But what happens when the error is more than an honest mistake? What if one party actually lies or conceals important information in order to get the other party to sign the contract? This is known as "bad faith." If a party's actions rise to the level of bad faith, the other party can recover damages in a lawsuit against them.
The Legal Standard of Bad Faith
Bad faith examines a party's true intentions in entering into a contract. If the party genuinely intended to fulfill his or her end of the bargain, this is good faith. Even if subsequent events make the contract unenforceable or unreasonable to fulfill, the party's intention was to live up to the contract, and this is what determines that good faith existed.
But when a party does not intend to enter into a binding legal contract and fulfill the obligations of that contract, he or she has acted in bad faith. Common examples in construction contracts involve the key terms of a bid. For example: if a contractor makes a bid to complete a job for $10,000 but knows the job cannot be done for less than $20,000, this would be bad faith. The homeowner would be able to sue the contractor for entering into the contract in bad faith. Timelines for finishing work are another common example of bad faith. If a contractor promises to finish a job in two weeks, because he knows that you will not sign a contract if he makes an honest estimate of four weeks, this would be bad faith.
Legal Damages as the Result of a Contractor’s Bad Faith
So how much money is a homeowner entitled to as a result of a contractor’s bad faith? Generally, damages will be limited to the actual amount of money you lost as a direct result of the contractor’s bad faith. For example: if the contractor bid $10,000 to induce you to sign the contract, but it actually cost $20,000 to finish, your losses are the $10,000 difference. The court could order the contractor to pay the difference (though it would likely be simpler for the contractor to simply finish the job for $10,000 and seek no additional payment).
In the example of a delayed finish, your loss was the use of your house. It can be difficult to determine what the use of your house was worth. But if, for example, you had to get a hotel for that time, it would be easy to set the value of your losses as whatever you had to spend on the hotel. The losses you experience will be different in every case of bad faith. This is why it is important to consult with a lawyer about your particular situation.
Experienced Charleston Bad Faith Construction Lawyers
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