Consequential Damages Law & Legal Definition

Consequential damages are those that are not a direct result of an act, but a consequence of the initial act. To be awarded consequential damages in a lawsuit, they must be a foreseeable result of an act. In a contractual situation, consequential damages resulting from the seller’s breach include any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover (obtaining a substitute) or otherwise. Many warranties seek to exclude or limit consequential damages, such as exclusion for loss of time, inconvenience, loss of use of the vehicle or commercial loss in car warranties.

The following is an example of a state statute dealing with consequential damages in a lease situation:

1. "Incidental damages resulting from a lessor's default include expenses reasonably incurred in inspection, receipt, transportation, and care and custody of goods rightfully rejected or goods the acceptance of which is justifiably revoked, any commercially reasonable charges, expenses or commissions in connection with effecting cover, and any other reasonable expense incident to the default.
2. Consequential damages resulting from a lessor's default include:

1. any loss resulting from general or particular requirements and needs of which the lessor at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
2. injury to person or property proximately resulting from any breach of warranty."

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