Consequential Damages

Consequential damages, otherwise known as special damages, are damages you can prove occurred because of the failure of one party to meet a contractual obligation. They go beyond the contract itself and into the actions garnished from the failure to fulfill. The type of claim giving rise to the damages can affect the rules or calculations associated with a given type of damages, including consequential damages (e.g., breach of contract versus a tort claim). For example, consequential damages are a potential type of expectation damages which arise in contract law.

When a contract is breached, the recognized remedy for an owner is recovery of damages that result directly from the breach (aka "Direct Damages), such as the cost to repair or complete the work in accordance with the contract documents, the loss of value of lost or damaged work. Consequential damages (also sometimes referred to as indirect or “special” damages), include loss of product and loss of profit or revenue and may be recovered if it is determined such damages were reasonably foreseeable or "within the contemplation of the parties" at the time of contract formation. This is a factual determination that could lead to the contractor's liability for an enormous loss. For example, the cost to complete unfinished work on time may pale in comparison to the loss of operating revenue an owner might claim as a result of late completion.

The Supreme Court of the United States has held that consequential damages are not available in U.S. Federal takings.

Read more about Consequential Damages:  Example, Total Measure of Damages: Compensatory Damages and Consequential Damages (lost Profit)

Famous quotes containing the word damages:

    According to the law of nature it is only fair that no one should become richer through damages and injuries suffered by another.
    Marcus Tullius Cicero (106–43 B.C.)