Consequential (indirect) damages are those that do not flow directly from the breach but instead are a secondary or indirect consequence of the breach. Indirect Damages. Indirect and Consequential Loss… The first issue was the meaning of the words "indirect and consequential loss". The definition of consequential damages, also known as "special damages," refers to damages from an indirect result of an event or incident. Consequential damages include, but are not limited to, lost profits, lost revenues, and lost business opportunity, whether the other party was or should From a legal standpoint, an enforceable contract is present when it is: expressed by a valid offer and acceptance, has adequate consideration, mutual assent, capacity, and legality. You can start by clearly defining direct damages. It makes little sense to have them also define the boundary between direct and consequential damages. Startup Company’s consequential damages are arguably the $50,000 in lost profits. It’s only a difference of two words – loss vs. damage – but it can be very confusing for your car insurance clients to understand. These occur when a party breaches a contract and is liable for all foreseeable losses incurred by the other party. than indirect or consequential damages. Consequential damages is a legal term referring to an injury or loss that is sustained by someone as an indirect result of another person's action. In order to be included within the claimant’s recovery, consequential damages must have been within the contemplation of the parties, or flow from special circumstances attending the contract known to both parties, when the contract was executed. Damage to reputation or goodwill. These types of damages are a more indirect nature rather than direct damages like destroyed equipment discussed earlier. They go beyond the express terms and conditions of the contract itself and into the actions that flow from the breach. There has been some confusion within the South African legal profession in relation to the concepts of direct and consequential damages. Indirect or consequential damages would be damages that weren't immediately foreseeable or obvious at the time of contract (i.e. these often include overhead expenses, delay damages, lost profits if a company was going to incorporate or resell the goods to another party; damages arising out of loss of use of the capital). Consequential Damages – What is the Difference, Really? Consequential damages are a big concern because they include items that one might not ordinarily contemplate when providing design services. Cagle, supra, at 635. Judge Posner, for example, purported to distinguish between direct and consequential damages, “the difference lying in the degree to which The Supplier shall be liable for the following types of loss, damage, cost or expense which shall be regarded as direct and shall (without in any way, limiting other categories of loss, damage, cost or expense which may be recoverable by the Authority) be recoverable by the Authority: Direct vs. Corp., 758 … Many people, even while negotiating the terms of a contract “mutual waiver of consequential damages” clause, fail to appreciate the distinction between direct and consequential damages. Consequential Damages. Tweet. There are different categories of damages, including “general” (aka “direct”) and “consequential” (aka “indirect” or “special”). Consequential damages are more indirect, being incurred not as a result of the breach itself, but due to the end result of the breach. 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