Classification of a defect as breach of contract or tort: a comparative study of the U.S. and the Republic of Lithuania

Abstract

Purpose – this paper compares the approach of United States’ law and Lithuanian law in classifying a construction defect as a breach of contract or tort. Research methodology – the paper uses case studies to analyze. Unites States’ law approach divides damages into damages for breach of contract and tort damages. According to Lithuanian law, civil liability is assigned to contractual and non-contractual (tort) liability depending on the nature of the unlawful actions. Findings – the cases demonstrate that a defect usually is considered a breach of contract. Different types of damages are recoverable: compensatory damages according to United States’ law and direct and indirect damages are recoverable according to Lithuanian law. Research limitations – both contractual and non-contractual liability are analyzed. In addition, defects to construction by an act of fraud are covered. More research is needed on how the law affects the extension of the warranty period or the statute of limitations. Originality/Value – the paper provides a new interpretation of classification a construction defect as a breach of contract or tort and offers new insights comparing the different approach of law. Practical implications – the paper will be instructive to developers, contractors, management corporations.