International Construction Law Review
CORRESPONDENT REPORT – SINGAPORE
Avinash Pradhan
Partner at Rajah & Tann Singapore LLP And
Divyesh Menon*
Partner at Rajah & Tann Singapore LLP
I. INTRODUCTION
Consider the following scenario: a party seeks the “cost of cure” as damages for losses suffered arising from a breach of contract following the discovery of defective works. Cost of cure damages refer to compensation calculated based on the financial spend required to rectify or complete the defective work to bring it into conformity with the Contract. What is the relevance, if any, of that party’s intention to carry out the rectification works? Is the intention to cure a prerequisite to the award of cost of cure damages? Or is such intention merely a factor to be considered in the analysis? If it is the latter, what is the weight to be given to such intention? Is it a predominant factor, or merely one of several considerations to be weighed by the court?
Common law courts have not spoken with one voice on the issue, which brings into focus a tension between two established principles on compensatory damages. On one hand, it is trite that the court does not concern itself with the use to which a claimant intends to put an award of damages. On the other hand, however, there is an intuitive discomfort with awarding the cost of cure to a party that has no intention to carry out any repair work: can such a party truly be said to have suffered loss represented by the value of the cost of cure? If not, the alternative measure of damages is often the “diminution in value”, which assesses the difference in value in the property or project because of the defective work, as compared to that value had the Contract been properly performed.
Pt 2] Correspondent Report – Singapore
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