In an article in the first of the March 2014 editions of
Constructive Notes, consideration was given to the operation of
exclusory or limiting provisions directed to economic, indirect or
consequential loss. We have all seen simple clauses in contracts to
the effect of 'neither party is liable to the other for any
consequential or indirect loss'. The presumption of most
is that this will exclude damages that are too distant or unknown,
but what if anything, does it really exclude?
As a basic premise, when one party breaches a contract, the
other party is entitled to damages that flow from that breach. Over
time this principle has narrowed to what is commonly referred to as
the 'two limb approach'.1The two limbs
outline what types of damages can be claimed, all others being
considered too remote. The first limb is those damages that arise
naturally from a breach of contract (obvious and direct). The
second limb is those damages that are non-direct but that would
