Recovery requires that the loss was reasonably foreseeable at contracting under Hadley v. Baxendale. Lost profits from collateral transactions and business interruption are common categories.
Waivers excluding consequential damages are widely enforced.
Alternative Names:
Special Damages (Commercial)|Indirect Damages
Why it Matters?
Consequential damages waivers appear in most commercial agreements and are enforced, which frequently limits recovery to direct damages that are a fraction of the actual loss. Whether a particular loss is direct or consequential then becomes the contest, since lost profits on the contract itself may be direct while profits on collateral transactions are consequential. That characterization determines whether the waiver applies at all.
Frequently Confused with
Related terms
Frequently asked questions
Are consequential damages waivers enforced?
What is the recurring contest?
