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LSDefine
Simple English definitions for legal terms
diminution-in-value method
Read a random definition: loss damage waiver (LDW)
A quick definition of diminution-in-value method:
The diminution-in-value method is a way to figure out how much money someone should get if someone else breaks a promise. It works by looking at how much less something is worth because of the broken promise.
A more thorough explanation:
The diminution-in-value method is a way of calculating damages for breach of contract. It is based on the idea that the breach has caused a reduction in market value.
For example, let's say that a contractor agrees to build a house for a homeowner. The contract specifies that the house will have four bedrooms, but the contractor only builds three. The homeowner can use the diminution-in-value method to calculate damages by determining the difference in market value between a three-bedroom house and a four-bedroom house in the same neighborhood.
Another example would be if a car dealership sells a car to a customer, but fails to disclose that the car has been in a major accident. The customer can use the diminution-in-value method to calculate damages by determining the difference in market value between a car that has been in a major accident and a car that has not.
These examples illustrate how the diminution-in-value method can be used to calculate damages in cases where the breach of contract has caused a reduction in market value.