Consequential loss CASES

In English law, consequential loss refers to indirect or secondary losses resulting from breaches of contract or negligent acts, extending beyond immediate or direct losses.

Definition and Principles

Consequential losses include financial harm arising indirectly from the initial breach, such as lost profits, additional expenses, or other economic losses not directly linked to the initial harm.

Key Characteristics

• Indirect Nature: Losses not directly resulting from the immediate breach or harm.
• Foreseeability: Recoverable only if losses were reasonably foreseeable when the contract was formed.

Examples

• Lost business profits due to delayed supply of essential goods.
• Extra operating expenses incurred from equipment breakdown.

Practical Importance

Recognising consequential losses clarifies liability scopes, informing parties how to clearly draft contract clauses, such as exclusions or limitations, reducing disputes and risk.