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Difference in Value Rule

Definition

A rule of damages that applies when a builder’s failure to perform under a construction contract is both trivial and innocent. In this circumstance, the measure of damages is the diminution in value of the building rather than the cost of tearing apart the structure and properly completing the contract. When, however, the damage is so substantial as to render the finished building partially unusable and unsafe, the difference in value rule does not apply, and the correct measure of damages is instead the market price of completing or correcting the performance.

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