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Consequential loss: Difference between revisions
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Consequential loss, sometimes called [[indirect loss]], [[relational economic loss]], [[loss of opportunity]] or [[loss of profits]] is a loss claimed to arise as a result of breach of contract that did not arise ''directly'' out of the failure by one party to perform the contract, but is better looked at as the opportunity cost suffered by the innocent person in entering a contract which you then breached. | {{g}}[[Consequential loss]], sometimes called [[indirect loss]], [[relational economic loss]], [[loss of opportunity]] or [[loss of profits]] is a loss claimed to arise as a result of breach of contract that did not arise ''directly'' out of the failure by one party to perform the contract, but is better looked at as the opportunity cost suffered by the innocent person in entering a contract which you then breached. | ||
These days, the extent of [[damages]] are guided generally by the usual rules regarding foreseeability, [[causation]] and [[remoteness of damage]], but in most cases, [[consequential loss]] will fail these tests—especially foreseeability—and unlikely to be recoverable in an ordinary action for [[breach of contract]], at least in the absence of an [[indemnity]]. | These days, the extent of [[damages]] are guided generally by the usual rules regarding foreseeability, [[causation]] and [[remoteness of damage]], but in most cases, [[consequential loss]] will fail these tests—especially foreseeability—and unlikely to be recoverable in an ordinary action for [[breach of contract]], at least in the absence of an [[indemnity]]. | ||
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===Example - the [[confidentiality agreement]]=== | ===Example - the [[confidentiality agreement]]=== | ||
The accursed [[NDA]], | The accursed [[NDA]] where, if you can really claim [[contractual damages]]<ref>[[Damages]] arising from misuse of [[intellectual property]] aren’t at their core, [[contractual damages]], because [[intellectual property]] rights don’t arise by {{tag|contract}} — well, not a [[confi]] at any rate.</ref> at all, they are likely to be all of a consequential and highly speculative nature. The fellow who had your client list and used it to win business from your clients you aspired to win yourself has at worst caused you a consequential loss: the loss of profits from that business. But more likely {{sex|she}} has not caused your [[loss]] at all: ''you'' have, through your inferior product. <br> | ||
===[[Remoteness of damage]]=== | ===[[Remoteness of damage]]=== | ||
It is sometimes, erroneously, said that [[consequential loss]] is not recoverable under ordinary [[contractual damages]] principles. The test of “[[remoteness of damage]]” is “[[foreseeability]]”—or “what was in the reasonable contemplation of the parties”. Now it is true that in many cases [[consequential loss]] is ''not'' in the reasonable contemplation of the parties. But this is not necessarily so: sometimes it is, as the example above points up quite nicely: | It is sometimes, erroneously, said that [[consequential loss]] is not recoverable under ordinary [[contractual damages]] principles. The test of “[[remoteness of damage]]” is “[[foreseeability]]”—or “what was in the reasonable contemplation of the parties”. Now it is true that in many cases [[consequential loss]] is ''not'' in the reasonable contemplation of the parties. But this is not necessarily so: sometimes it is, as the example above points up quite nicely: | ||
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{{c2|Contract|Damages}} | {{c2|Contract|Damages}} | ||
{{ref}} | |||