Legal Question in Construction Law in California

Re: breach of contractor's contract

Thomas, assuming that you are licensed and had a written contract, you are probably pretty well protected, at least in theory, by fairly well-established contract law principles.

When a contract is breached, the damages of the non-breaching party are often reckoned as the "benefit of the bargain." This means that if the contractor can show that he stood to make $15,000 net profit on the contract, and he has spent $40,000 out-of-pocket and received only a $5,000 deposit so far, his damages are $40,000 + $15,000 - $5,000, or $50,000. It doesn't always work out this way, because judges and juries have, and take, liberties with the basic rules, and determining your loss may depend upon whether you sat on your hands during the period cancelation of this job gave you available time, or whether you found (or could have found) other work.

So, the full amount of the contract is probably not the correct measure of damages. Instead, you are probably entitled to your expected profit. If you were only halfway into the contract when you were cut off, getting your expected profit probably does not equate to the defaulting client having to pay the full contract price. That would only be necessary if you had to pay the full contract costs. Surely you saved some labor, material and overhead cost by not having to do the second half of the job. That amount should be deducted from your demand. The result should give you your full expected profit. A court would not allow you to profit from charging full contract price when you didn't incur full contract costs.

Re: breach of contractor's contract

If you feel entitled to be paid, and if you can't resolve it, then sue. Under $7500 use small claims court. Over that, you have to use Superior Court. Either way, take your evidence and try to win your case. If you don't know how to do so, if in Superior Court, hire an attorney.