The Difference Between Consequential and Unconsequential Damages
The term “consequential” refers to events and situations that have consequences, such as a hurricane. A simple slipping and falling on a wet sidewalk is not consequential. A major earthquake is not consequential, nor is a minor accident. While many events and situations can be considered consequential, there are some that cannot be deemed so. In this article, we’ll discuss a few examples of important and unimportant consequential events.
A party to a contract may assert loss of rental income as a form of consequential damage. This type of damage relates to the loss of income a property will generate. It is similar to the category of speculative damages, such as loss of profit. The term is generally used to describe losses a party might suffer in special circumstances, such as a construction project that is delayed. While a loss of opportunity or a difference in market value is a consequential damage, it’s not the same as a loss of resale value.
A company suffering from a faulty construction job may be able to sue its contractor for lost wages. If a contractor fails to deliver a project on time, the real estate developer can also claim consequential damages. This type of loss is unrelated to the accident or incident and is therefore a purely economic consequence. In the case of a failure to meet a deadline, the loss of wages is a form of indirect damage.
A company can seek compensation for lost profits even if they were not aware of the underlying cause of the loss. For example, a power plant owner wrongfully terminated an O&M agreement before the agreed-upon term, causing the O&M provider to lose a portion of its profits. The other dominoes would fall as a result of the breach.
If a plaintiff wants to claim a consequential damage, he or she must prove that the damages were reasonably foreseeable at the time of the contract. The foreseeable damages, which include lost rental income or revenue, must be within the parties’ contemplation at the time of signing. Whether the damages are speculative or direct depends on the facts and legal situation.
A contract with a clause for consequential damages may also cover other types of damages. A coal conveyer is an example of a consequential damage. For example, a company’s boilers are not operational due to a lack of fuel. As a result, the coal conveyer will cause problems, which will result in high costs. The resulting financial and emotional damage is a monetary loss. A disclaimer of the liability for consequential damages may affect the amount of recovery of the alleged damages.
In a contract between two parties, incidental and consequential damages are different types of damages. While incidental damages are foreseeable, a consequential damage is not a direct result of a breach. It results from circumstances beyond the parties’ control, such as a failure to meet the obligations of the contract. TIf you are liable for these damages, you may be able to claim compensation.