Also known as: incidental losses · incidental damages
Written by attorneys · grounded in primary & secondary sources — see below
Expenses reasonably incurred by an aggrieved party in reacting to another's breach or wrong. These costs arise after the breach occurs and include outlays for inspection, transportation, care of goods, effecting cover, stopping delivery, or resale.
Ironclad Industries contracted to sell custom machinery to Ivan Ivanov. After Ivanov repudiated, Ironclad stored the identified goods for three months and paid a broker to locate a new buyer. The storage fees and commission qualify as recoverable incidental loss because they were commercially reasonable charges incurred after the breach in caring for and reselling the goods.
Infinity Bank ordered specialized servers from Inertia Dynamics. Upon delivery the bank discovered defects during inspection, rejected the goods, and paid a premium to a substitute supplier for immediate cover. The inspection costs and extra cover charges constitute incidental loss because they were reasonable expenses triggered by the seller's breach.
Select any source to read its text and confirm it supports the definition.
Insight Consulting agreed to purchase a fleet of vehicles from a marine dealer. After the buyer repudiated, the dealer retained the identified vehicles in its lot and incurred ongoing security and maintenance expenses while seeking a replacement purchaser. These holding costs count as incidental loss because they resulted directly from the buyer's breach and the dealer's need to care for the goods.
Direct loss measures the reduction in value of the promised performance itself. Incidental loss instead captures the separate out-of-pocket costs the aggrieved party incurs while responding to the breach, such as storage, inspection, or cover expenses.
Supporting sources
Yes. UCC § 2-710 awards an aggrieved seller commercially reasonable charges incurred after the buyer's breach in stopping delivery, caring for goods, or reselling. UCC § 2-715(1) awards a buyer expenses for inspection, receipt, transportation, care of rejected goods, and effecting cover.
Yes. Like other contract damages, incidental losses must be shown with reasonable certainty and must have been foreseeable at the time of contracting. Courts routinely allow recovery when the expenses are documented and directly traceable to the breach.
Supporting sources
Yes. When a landlord's breach forces a tenant to terminate and relocate, reasonable moving, storage, and reconfiguration expenses qualify as incidental loss and are recoverable as part of the tenant's expectation damages.
Supporting sources
…and Jasen concur) Opinion of Judge Gibson The appeal concerns the right of a retail dealer to recover loss of profits and incidental damages upon the buyer’s repudiation of a contract governed by the Uniform Commercial Code. This is, indeed, the correct measure of damage in an appropriate case and to this extent the code (§…