Financial Compensation: Recovery of Direct Loss and/or Expense or Additional Costs

The legal principles involved in formulating claims for financial compensation are well settled, but often, applying those principles in practice is far from easy. This chapter is concerned with ‘compensation’ or reimbursement of the actual costs incurred – akin to common law damages. When dealing with financial compensation, the approaches taken by Joint Contracts Tribunal, JCT 2016 and New Engineering Contract, NEC4 contracts share a number of characteristics with each other, but aim to achieve their conclusion in very different ways. It is important to understand the difference between direct and indirect loss or damage because a party in breach may not be liable to pay all the damage suffered by the injured party. The chapter focuses on prolongation costs, on-site establishment costs, management personnel costs, and plant costs. It is not unusual for building contracts to contain exclusive remedy clauses which limit a contracting party to a particular remedy.