Are "No Consequential Damages" Clauses Enforceable?

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What Are No Consequential Damages Clauses?

In contract law, consequential damages, commonly referred to as "special damages" or "expectation damages," are a type of damages that arise as a result of a breach by one party. While direct damages focus on the costs associated directly with the contract itself, consequential damages focus on the costs outside of the contract. These are typically:

Clauses that forbid consequential damages are extremely commonplace, almost to the extent of becoming considered "boilerplate." These clauses often say that either one of the parties will not be liable for the consequential damages that result in the event of a breach.

Are Consequential Damages Clauses Enforceable?

It will depend largely on the language of the contract. However, regardless of what the contract or the clause itself says, there is an increasing trend towards determining these clauses unenforceable, likely because parties do not write them with enough care. There are a couple of general points that render these clauses as unenforceable.

What Are Some Considerations Courts Make?

There are several considerations courts examine when determining the validity of these clauses, including:

Should I Seek Legal Help?

Given the changing viewpoints and complicated nature of limitations on damages, if you are involved in a contract dispute, seeking the advice of an attorney is highly recommended.

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Last Modified: 04-09-2014 04:24 PM PDT

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