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Consequential loss: Difference between revisions
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In the old days, there was some authority that [[consequential loss]] was not recoverable at all, unless specifically in the contemplation of the parties — that authority is {{casenote|Hadley|Baxendale}}. | In the old days, there was some authority that [[consequential loss]] was not recoverable at all, unless specifically in the contemplation of the parties — that authority is {{casenote|Hadley|Baxendale}}. | ||
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 | 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 are unlikely to be recoverable in an ordinary action for [[breach of contract]], at least in the absence of an [[indemnity]]. | ||
===[[Indemnities]]=== | ===[[Indemnities]]=== | ||
Pay particular attention to [[indemnities]]. Unless [[Well-crafted indemnity|well-crafted]] — and most are not — [[indemnities]] are oddly susceptible to [[consequential loss]] bother, because they do not depend on a [[breach of contract]] for payment, and so the usual rules of [[remoteness]] and [[foreseeability]] do not apply. Courts are likely to treat ''badly'' constructed [[indemnities]] rather like contractual breaches,<ref>But might not — so why take that risk?</ref> but where an [[indemnity]] is very wide (as many are) it is not controversial to exclude consequential and indirect losses from its scope. If your counterparty baulks at this, she’s either a bit of a dick or — more likely — she doesn’t really understand indemnities. (Many lawyers don’t.) | Pay particular attention to [[indemnities]]. Unless [[Well-crafted indemnity|well-crafted]] — and most are not — [[indemnities]] are oddly susceptible to [[consequential loss]] bother, because they do not depend on a [[breach of contract]] for payment, and so the usual rules of [[remoteness]] and [[foreseeability]] do not apply. Courts are likely to treat ''badly'' constructed [[indemnities]] rather like contractual breaches,<ref>But might not — so why take that risk?</ref> but where an [[indemnity]] is very wide (as many are) it is not controversial to exclude consequential and indirect losses from its scope. If your counterparty baulks at this, she’s either a bit of a dick or — more likely — she doesn’t really understand [[indemnities]]. (Many lawyers don’t.) | ||
In any case trying to recover [[consequential losses]] for [[breach of contract]] through sneaky [[indemnities]] is dick behaviour, basically, and another reason never to agree indemnities for [[breach of contract]]. | In any case trying to recover [[consequential losses]] for [[breach of contract]] through sneaky [[indemnities]] is dick behaviour, basically, and another reason never to agree indemnities for [[breach of contract]]. | ||
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''There is more — much more — on this topic at the [[indemnities]] article.'' | ''There is more — much more — on this topic at the [[indemnities]] article.'' | ||
===When [[consequential losses]] ''are'' foreseeable: [[stock lending]]=== | ===When [[consequential losses]] ''are'' [[Foreseeability|foreseeable]]: [[stock lending]]=== | ||
Sometimes consequential losses ''are'' within the parties’ reasonable contemplation, | Sometimes [[consequential losses]] ''are'' within the parties’ reasonable contemplation, easy enough to calculate, and it is fair enough to include them. Such as, upon a failure to settle a [[stock loan]]. The failure to make the onward delivery might incur a {{gmslaprov|buy-in}} cost from the onward recipient. | ||
===When [[consequential losses]] is | ===When [[consequential losses]] is alls you got: [[confidentiality agreement]]s=== | ||
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 under a [[confi]] at any rate.</ref> at all, they are all likely to [[Consequential loss|consequential]] and speculative in nature. | 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 under a [[confi]] at any rate.</ref> at all, they are all likely to [[Consequential loss|consequential]] and speculative in nature. | ||
The chap who had your client list and used it to win business you aspired to win yourself has, at worst, caused you a consequential loss: the [[loss of profits]] from that business. But more likely, {{sex|he}} has not “caused” your [[loss]] at all: ''you'' have, through your crappy product. Look, I’m just the messenger, okay?<br> | The chap who had your client list and used it to win business you aspired to win yourself has, at worst, caused you a [[consequential loss]]: the [[loss of profits]] from that business. But more likely, {{sex|he}} has not “caused” your [[loss]] at all: ''you'' have, through your crappy product. Look, I’m just the messenger, okay?<br> | ||
{{sa}} | {{sa}} | ||
{{casenote|Hadley|Baxendale}} | {{casenote|Hadley|Baxendale}} | ||