You are entering a major construction contract. You want to make
sure you avoid a big damages claim to the extent you can. One of
the typical contract clauses that comes to mind is one for a mutual
waiver of consequential damages. You get it included in your
contract and you breathe a sigh of relief: I've got that one
covered. But, ... do you? Does your mutual waiver of consequential
damages have holes in it that leave you exposed? In other words, is
it inconsequential?
Here's the problem: the word “consequential”
is so broad and vague that lawyers can argue endlessly about what
are or are not consequential damages. More importantly, judges,
juries, and arbitrators can have very different and, indeed,
conflicting, views as to what is consequential and what is not.
Lost profits is a great example. Some courts hold that lost profits
are the natural and probable consequence of a breach of contract
— which is the typical standard for recoverable damages
— and some courts
