In the event that the cost and expense of the improvement work payable by the real estate benefited by such work exceeds the construction costs set forth in the contract, because of an act or omission of the legislative body or its superintendent of streets, officers, or employees occurring prior to the award of the contract which subjects the legislative body to liability pursuant to Division 3.6 (commencing with Section 810), Title 1 of the Government Code, the legislative body may settle this liability out of court, or may pay a judgment rendered by the court as to this liability, by a payment out of the General Fund or by an additional assessment.