Define: Consequential Damages

Consequential damages, also known as special or indirect damages, are losses that arise as a result of a breach of contract or other wrongful act and are not directly caused by the breach itself but instead result from the consequences or effects of the breach. These damages typically include financial losses that are not immediate or direct but arise as a foreseeable result of the breach. Examples of consequential damages may include lost profits, loss of business opportunities, or additional expenses incurred to rectify the breach. Unlike direct damages, which compensate for losses directly caused by the breach, consequential damages compensate for losses that are secondary or incidental to the breach but still foreseeable to the breaching party at the time of entering into the contract or committing the wrongful act. The availability and calculation of consequential damages depend on the specific circumstances of each case and the applicable legal principles.

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This glossary post was last updated: 29th March 2024.