Also known as: incidental and consequential loss · incidental or consequential losses · consequential damages · incidental damages
Written by attorneys · grounded in primary & secondary sources — see below
Any additional loss beyond the diminished value of the promised performance that results from a breach of contract.
West Dispatch contracted with Central Shipping for five refrigerated trailers needed to fulfill holiday retailer commitments and a new national supply contract. Central delivered two weeks late with defective refrigeration units that spoiled produce shipments. West Dispatch lost the national contract and incurred extra chartering costs for substitute trucks.
North Drive bought brake assemblies from West Fleet to service customer vehicles under a long-term supply contract. West Fleet cancelled remaining shipments after its warehouse flooded. North Drive promptly purchased substitutes from two other distributors at higher prices to keep repair bays open.
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Atlas Appliances ordered specialized motors from Metro Motors for October delivery at a fixed price. Metro repudiated the contract before the delivery date. Atlas purchased replacement motors on the open market at a higher price after learning of the repudiation.
Pacific Retail received a shipment of fashion units from Park Merchandise that failed to meet contract specifications. Pacific incurred expenses inspecting the goods, arranging transportation for return, and storing the rejected units pending resolution.
Icarus Aviation purchased aircraft components from Ironclad Industries under a contract that excluded consequential damages for commercial losses. A defect caused Ironclad to miss production deadlines and lose a major client contract. Icarus sought to recover the lost profits despite the exclusion clause.
Iris Irons purchased cigarettes manufactured by Liggett Group after seeing advertisements that formed an express warranty. She developed lung cancer from smoking the product. Iris sought recovery for medical expenses and lost wages as consequential losses flowing from the warranty breach.
Incidental damages include expenses reasonably incurred in inspection, receipt, transportation, and care of rightfully rejected goods, plus commercially reasonable charges in connection with cover and other reasonable expenses incident to the breach.
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Consequential damages may be limited or excluded unless the limitation is unconscionable. A limitation for personal injury in consumer goods is prima facie unconscionable, but a limitation for commercial loss is not.
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The buyer must show the loss resulted from requirements the seller had reason to know at contracting and that the loss could not reasonably be prevented by cover or otherwise.
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No. Failure to effect cover does not bar the buyer from any other remedy, including consequential damages.
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…On Zeidenberg’s arguments, these unboxed sales are unfettered by terms—so the seller has made a broad warranty and must pay consequential damages for any shortfalls in performance, two “promises” that if taken seriously would drive prices through the ceiling or return transactions to the horse-and-buggy age. According to the…