What is the difference between consequential and incidental damages?

The difference between incidental and consequential damages is the cause of the expense or loss. Incidental damages are the direct result of one party's breach of contract. Consequential damages are more indirect, being incurred not as a result of the breach itself, but due to the end result of the breach.

What is meant by incidental damages?

Incidental damages are incidental expenses incurred by the non-breaching party in order to avoid other direct and consequential losses of breach.

What is the difference between special and consequential damages?

Consequential damages, otherwise known as special damages, are damages that can be proven to have occurred because of the failure of one party to meet a contractual obligation, a breach of contract.

What is the difference between consequential damages and compensatory damages?

Compensatory damages compensate for the special loss suffered; consequential damages compensate for the foreseeable consequences of the breach; incidental damages compensate for the costs of keeping any more damages from occurring; nominal damages are awarded if the actual amount cannot be shown or there are no actual ...

What is the meaning of consequential damages?

Damages suffered because of the injured party's particular circumstances. Also called special damages, since they result from a breach of contract and yet would not necessarily be incurred by every injured party experiencing that breach.

Contracts II - Unit 12.4 (Remedies for Breach - Consequential, Incidental, and Liquidated Damages)

What is a consequential loss example?

A consequential loss is an indirect loss that accompanies an insured loss, for example the loss of earnings arising from a property fire, experienced by a business insured against fire.

Are consequential damages recoverable?

Modern Day Consequential Damages

The non-breaching party is entitled to recover all damages sustained to place the non-breaching party in a position where the party would have been had there been no breach of contract.

Are incidental damages compensatory?

Compensatory damages compensate for the special loss suffered; consequential damages compensate for the foreseeable consequences of the breach; incidental damages compensate for the costs of keeping any more damages from occurring; nominal damages are awarded if the actual amount cannot be shown or there are no actual ...

What are the 3 types of damages?

What are the 2 types of compensatory damages?

There are two types of compensatory damages—general and actual. Actual damages are intended to provide funds to only replace what was lost. General compensatory damages awarded are more complex, as these compensatory damages do not represent a monetary expenditure.

Why are consequential damages excluded?

Exclusions of consequential damages are among the most common and important provisions in a wide variety of contracts. They can significantly reduce the breaching party's liability, sometimes by staggering amounts of money.

What does no consequential damages mean?

The definition of consequential damages, also known as "special damages," refers to damages from an indirect result of an event or incident.

What is consequential damages in construction?

Consequential damages are damages which flow indirectly from a breach of contract and are typically related to delays in performance and delays in completion of a project.

Which is an example of a consequential or indirect loss?

Till the owner purchases a new set of machinery, the operations will remain halted. This loss due to the halting of daily business operations is an example of consequential loss as it is an indirect loss. It is not covered under the insurance for direct losses.

Are liquidated damages consequential damages?

The parties should be careful to guard against the recovery being overly disproportionate to actual damages. Thus—should the agreed amount of liquidated damages be in gross excess of actual consequential damages—courts have generally construed the provision for liquidated damages to be an unenforceable penalty.

Is pain and suffering a consequential damage?

Compensatory damages may be imposed for a person's pain and suffering. These are called nonpecuniary damages because they are difficult to quantify, but they are nevertheless viewed as legitimate compensation for a legally recognized harm.

How many types of damages are there?

There are four types of damages which can be claimed by the aggrieved party. Ordinary Damages or General Damages. Exemplary or Vindictive Damages. Nominal Damages.

What is the difference between punitive and compensatory damages?

Compensatory And Punitive Damages

The compensatory damages awarded to plaintiffs are designed to give justice to them after being wronged. Punitive damages are designed to prevent others from being hurt by the same or similar actions.

Can you get compensatory and consequential damages?

Consequential damages are indirect damages that a claimant suffers as a result of a breach of contract. Although consequential damages are far less common than compensatory damages, courts will award them under the right circumstances.

Who is liable for consequential damages?

Consequential (indirect) damages are those that do not flow directly from the breach but instead are a secondary or indirect consequence of the breach. These occur when a party breaches a contract and is liable for all foreseeable losses incurred by the other party.

Can consequential damages be waived?

The clause states that an architect and owner waive consequential damages for claims, disputes, or other matters in question arising out of or relating to the agreement. The mutual waiver applies to all consequential damages due to either party's termination of the agreement.

Can you claim for consequential loss?

It is recoverable only if the paying party knew or should have known of that circumstance when it made the contract, under the second limb of the rule in Hadley v Baxendale [1854] EWHC Exch J70. By definition, therefore, consequential losses are exceptional and often not recoverable.

How do you prove consequential losses?

What is the difference between direct loss and consequential loss?

Generally, the direct loss would be the difference between the contract price and the market price of those goods or services. This is the “normal loss”. The consequential losses are any other losses beyond this measure that are caused by the breach and not too remote.

What is a limitation of consequential damages?

EXCEPT IN THE CASE OF FRAUD, NEITHER PARTY SHALL BE LIABLE TO THE OTHER FOR LOSS OF PROFITS, OR ANY SPECIAL, CONSEQUENTIAL OR INCIDENTAL DAMAGES, HOWEVER CAUSED, KNOWN OR UNKNOWN, ANTICIPATED OR UNANTICIPATED, EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGE.