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Sub Will Cough Up 'expectation Damages' For Reneging On Bid

Saturday, October 01, 2011 08:55 am



Dynalectric Co. of Nevada, Inc. v. Clark & Sullivan Constructors, Inc., 2011 Nev. Lexis 43; 127 Nev. Adv. Rep. 41 (July 14, 2011)

When a sub refuses to perform, a contractor is entitled to expectation damages--that is, the difference between what it would have paid and what it did pay.

Clark and Sullivan Constructors, Inc. (C&S) bid on a project to expand the University Medical Center in Las Vegas. In its bid, it included a bid from subcontractor Dynalectric Company of Nevada, Inc. (Dynalectric) to perform electrical work on the project. When C&S informed Dynalectric that it had won the contract, Dynalectric refused to negotiate with C&S, and C&S was forced to contract with replacement subs for the project's electrical work. C&S sued Dynalectric for damages, and a district court awarded C&S $2.5 million, which represented the difference between Dynalectric's bid ($7.8 million) and the amount C&S paid the three replacement contractors to complete the work ($10.3 million). Dynalectric appealed, contending that the district court should not have awared C&S "expectation damages."

Nevada follows the doctrine of promissory estoppel, such that: "a promise which the promisor should reasonably expect to induce action or forbearance... and which does induce such action or forbearance is binding if injustice can be avoided only by enfor [...]

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