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{{g}}[[Consequential loss]], sometimes called [[indirect loss]], [[relational economic loss]], [[loss of opportunity]] or [[loss of profits]] is a loss | {{g}}[[Consequential loss]], sometimes called [[indirect loss]], [[relational economic loss]], [[loss of opportunity]] or [[loss of profits]] is a loss arising from a [[breach of contract]] not caused ''directly'' by the breach, but is a second-order consequence of it: such as the [[opportunity cost]] to the innocent party of having a contract with you which you then breached. | ||
Had I not been committed to rent you my car, I could have rented it to someone else ''for more money''. | |||
*'''[[Direct loss]]''': is the rental income you were supposed to pay me for the rental period. It is predictable, finite, determinate and easy the parties to hold in contemplation. “If I can’t go through with this the worst I can be stuck with is the cost of renting that car for a week. | |||
*'''[[Consequential loss]]''': the marginal extra income I could have earned had I not rented you the car at all, but rented it do someone else who was prepared to pay more for it. This is generally harder to get your head around. “Well, I was planning to be a free-lance limo driver, and I was going to worked non-stop, twenty-four hours a day for the whole period, only driving punters who were paying me £20 pounds a mile”. Almost everything about this is speculative, including what the claimant was planning to do with the car in the first place. It could have rented a car elsewhere (at exactly, or less than, its direct loss) and mitigated its ''consequential'' loss entirely without bothering the party in breach. | |||
In the old days, there was some authority that [[consequential loss]] was not recoverable at all, unless specifically agreed. | In the old days, there was some authority that [[consequential loss]] was not recoverable at all, unless specifically agreed. 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]]. | ||
Not so any more: see below. | |||
=== | ===Indemnities=== | ||
Pay particular attention to [[indemnities]]. where not [[Well-crafted indemnity|well-crafted]], as many are not, indemnities are oddly susceptible for consequential losses, because [[indemnities]] do not require a [[breach of contract]], and the usual rules of remoteness and foreseeability do not (in theory) apply. Badly constructed indemnities are likely to be treated rather like contractual breaches however, but where an indemnity is very wide (as many are) it is not controversial to exclude liability for consequential and indirect losses, and if your counterparty baulks at this, most likely she doesn’t really understand indemnities. Many lawyers don’t. | |||
''There is more — much more — on this topic at the [[indemnities]] article.'' | |||
[[ | ===When consequential losses are foreseeable: [[stock lending]]=== | ||
Sometimes consequential losses ''are'' within the parties’ reasonable contemplation, they are 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. | |||
=== | ===where consequential loss is the only realistic loss you can claim: - the [[confidentiality agreement]]=== | ||
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 all likely to 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|she}} has not caused your [[loss]] at all: ''you'' have, through your crappy product. <br> | |||
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 | |||
===[[Remoteness of damage]]=== | ===[[Remoteness of damage]]=== |