Consequential Damages Lawyers

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What Are Consequential Damages?

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. Consequential damages are damages that:

(a) are beyond direct damages suffered by a non-breaching party (b) that a reasonable, and prudent person would expect as a result of a breach (c) at the time of the contract, the breaching party should of known or anticipated if a breach occurred. These are mainly damages that a breaching party should of expected when they breached and would not be a surprise to them or a shock that it happened once they breached the contract.

What Are Some Examples of Consequential Damages?

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.

What Is the Meaning of Consequential Loss?

A consequential loss is the amount of loss that occurred as a result of a breach that was indirect to the actual loss. This could be as a result of being unable to use business property or equipment which then resulted into loss of business. The loss of business or profit would be considered consequential loss.

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. A experienced business attorney can review your case and advise you on your contract rights and steps you can take for full recovery.

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Last Modified: 01-23-2017 01:06 PM PST

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