diminution in value

Diminution in value is a method of calculating damages owed to a harmed party after another party breaches a contract . The damages are calculated 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 enter into a contract with a developer to build a home for $1,000,000 and the developer builds a home worth $700,000, the damages calculated using diminution in value would be $300,000. Diminution in value is to be contrasted with other methods of calculating damages such as reliance damages , consequential damages , and specific performance .

[Last reviewed in June of 2021 by the Wex Definitions Team ]

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