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LSDefine
Simple English definitions for legal terms
diminution in value
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A quick definition of diminution in value:
Diminution in value is a way to figure out how much money someone should get if another person breaks a contract. It works by taking the value of what was promised in the contract and subtracting the value of what was actually delivered. For example, if someone promised to build a house worth $1,000,000 but only built one worth $700,000, the person who was supposed to get the house could get $300,000 in damages using diminution in value. This is different from other ways of figuring out damages, like getting money for things that went wrong because of the broken contract or making the person who broke the contract do what they promised.
A more thorough explanation:
Diminution in value is a way to calculate damages owed to a person who has been harmed by another party's breach of contract. This method calculates damages by subtracting the market value of the object of the contract as performed from the value of the contract as promised.
For example, if you hire a contractor to build a house for $500,000 and the contractor builds a house worth only $300,000, the damages calculated using diminution in value would be $200,000.
Diminution in value is different from other methods of calculating damages, such as reliance damages, consequential damages, and specific performance.
Overall, diminution in value is a way to ensure that the harmed party is compensated for the difference between what they were promised in the contract and what they actually received.