Oregon Construction Contractors (CCB) Practice Test

What kind of damages does a contractor typically compensate for?

1. Emotional distress

2. Foreseeable economic losses

3. Unrelated third-party claims

4. Trust issues

The correct answer is: Foreseeable economic losses

A contractor typically compensates for foreseeable economic losses because these losses are directly connected to the performance of the contract. When a contractor fails to meet the terms of an agreement, the resulting financial implications, such as loss of profit or additional costs incurred by the homeowner or client, are seen as part of the contract’s impact. This principle is rooted in the expectations of both parties entering the contractual agreement, where it is reasonable to foresee that certain economic outcomes would arise from a failure to perform. Foreseeable economic losses are grounded in the idea of mitigating harm and ensuring that the injured party can recover financially from the breach. This compensation is generally constrained to losses that both parties could anticipate at the time the contract was formed, ensuring that the damages are fair and justifiable based on the initial agreement. In contrast, emotional distress damages, unrelated third-party claims, and trust issues do not typically fall under the realm of what contractors are liable for in the context of economic performance and contract disputes. Emotional distress is more subjective, unrelated claims can complicate liability, and trust issues, while significant in relationships, do not generally translate into compensable damages within a construction contract context.