Replacement cost can trump market value in some liability cases

04/12/2013 | Business Valuation Law blog

A replacement valuation is appropriate when no market for the property exists to determine lost value, according to a decision by the U.S. Court of Appeals for the 5th Circuit. The case involved damages to a refinery's sewage-treatment plant that was destroyed in an explosion, and defendants admitted liability. The court ruled that the plant was a unique facility and no market equivalent existed. Therefore, the replacement cost could be used for assessing damages.

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