Consequential Damages

From the Latin consequential (Latin: "following as a result").

In one sentence

Money awarded for indirect losses that result from a breach but are not the direct consequence of it.

Plain English

Consequential damages are the ripple effects of a breach—losses that flow indirectly from the broken promise rather than being the immediate result. If a supplier fails to deliver parts on time and your factory shuts down, losing you $100,000 in production, that lost production is a consequential damage. Courts are more cautious about awarding these because they can be hard to predict and measure. Generally, you can only recover consequential damages if the breaching party knew or should have known the breach would cause them.

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Example

A software company fails to deliver a critical program by the deadline. The client's business loses $50,000 because employees sit idle. That $50,000 is a consequential damage flowing from the late delivery.

Used in a sentence

“The court awarded consequential damages for the lost business profits that resulted from the supplier's failure to deliver on time.”

Related terms

Damages

Money awarded by a court to compensate a party for losses caused by a breach or wrongdoing.

Compensatory Damages

Money paid to reimburse a party for actual losses directly caused by a breach or wrongdoing.

Expectation Damages

Money awarded to put a party in the position they would have been in if the contract had been fully performed.

Reliance Damages

Compensation for losses suffered by relying on a promise, even if no formal contract exists.

Remedy

A legal action or payment a court awards to fix a harm or enforce a right after a breach.

Mitigation of Damages

A duty to take reasonable steps to minimize losses caused by another party's breach.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.