Also known as: indirect losses · consequential loss · consequential damages
Written by attorneys · grounded in primary & secondary sources — see below
A loss arising from the results of damage or breach rather than from the damage or breach itself. The loss is recoverable when it was foreseeable at the time of contracting and proven with reasonable certainty.
Ira Irving's grocery chain contracted for refrigerated trailers needed to fulfill holiday retailer deals. The seller delivered two weeks late with defective units, spoiling perishable goods and causing the retailers to cancel contracts. Ira seeks recovery of the resulting lost profits as indirect loss under the rule measuring damages by losses caused by the breach.
Ironclad Industries bought specialized parts from a supplier that failed to deliver. The buyer promptly purchased replacements at a higher price from another vendor to keep its assembly line running. Ironclad now claims the related expenses incurred because of the cover purchase as indirect loss recoverable alongside the cover differential.
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Imani Idowu contracted to buy components at a fixed price. The seller repudiated when market prices rose sharply. Imani measures her damages by the difference between the higher market price and the contract price plus additional expenses incurred because of the non-delivery.
Insight Consulting bought commercial software under a contract that excluded consequential damages. A defect caused the company to lose a major client contract. The buyer challenges the exclusion as unconscionable in a commercial setting where the loss was foreseeable to the seller.
Ivan Ivanov purchased a vehicle whose braking system failed, forcing him to rent substitute transportation and lose business opportunities. He sues the manufacturer seeking recovery of those downstream expenses as indirect loss arising from the product defect.
Isabella Ingram owned a building whose roof was occupied by unauthorized cable equipment. The installation prevented her from leasing the space at full market rates for several months. She claims the resulting rental shortfall as indirect loss caused by the permanent occupation.
Indirect loss arises from the results of the breach or damage rather than from the breach or damage itself. Direct loss measures the immediate reduction in value of performance. Courts recover indirect loss only when it was foreseeable and proven with reasonable certainty.
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A buyer may recover incidental or consequential damages in addition to the difference between cover price and contract price. The buyer must act in good faith and without unreasonable delay. Failure to cover does not bar other remedies including indirect loss.
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Consequential damages may be limited or excluded unless the limitation is unconscionable. In commercial settings the exclusion is not prima facie unconscionable. Limitation of personal injury damages for consumer goods is presumed unconscionable.
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The plaintiff must prove the loss resulted from the breach, was foreseeable at contracting, and can be established with reasonable certainty. Historical data or concrete commitments help satisfy the certainty requirement.
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…on the one hand, and cases involving a more temporary invasion, or government action outside the owner's property that causes consequential damages within, on the other. A taking has always been found only in the former situation. See United States v. Lynah , 188 U. S. 445, 468-470 (1903); Bedford v. United States , 192 U. S.…