What are Consequential Damages in Contracts Cases?

No matter what type of case you or your loved one might bring to a South Florida attorney’s desk, a common question that a prospective client should always ask is: what is my case worth? The answer to that question centers around whether you sustained “damages” as a result of the circumstances of your case. “Damages” refer to the harm, whether it be physical or financial, that a plaintiff suffered as a result of the facts of their case.  Especially in the context of a contracts or business case, an experienced South Florida attorney will likely refer to “consequential” damages sustained by you or your company as a result of another person or company’s contractual breach.  But what are “consequential” damages? Are they the same as special, general, or punitive damages? How can an attorney tell the difference? In this blog post, the experienced contracts and complex business litigation attorneys at Clayton Trial Lawyers (“CTL”) will explain what types of damages constitute “consequential” damages. 

Reasonably Foreseeable for Contracting Parties, or “Out of Left Field”?

At its most basic level in contracts cases, damages are considered “consequential” if they are the natural, foreseeable result of the breaching party’s actions. For example, assume that Babe buys a truckload of baseball bats made of maple wood from Ted. Assume also, that Ted delivers baseball bats to Miguel in accordance with the contract, but he delivers ash wood bats instead of maple wood bats. What would be Babe’s “consequential damages” for Ted’s breach of contract?  

Consequential damages for which Ted would be responsible because of his breach likely will only include items that would have been reasonably foreseeable by both parties in advance of signing their contract. These items likely would include: the difference in cost between maple (a higher quality wood) versus ash; the costs to re-deliver and ship Babe the correct maple bats pursuant to the contract; and/or, other potential costs incurred by Babe to cover for the lack of maple bats in his inventory.  

However, Babe would likely be unable to recover damages from Ted that take the form of lost profits—customer sales that Babe missed out on making because of the delay in receiving maple bats from Ted. Even though there may be a very reliable method of calculating such lost profits, Babe would not be able to recover such damages from Ted unless Babe made Ted aware of such circumstances or if they incorporated them into their contract.  

Consequential Damages Differ from Damages from Tort or “Punitive” Damages

Contracts cases are usually limited to recovery of consequential damages, as described above. However, in torts cases, or contracts cases that involve intentional torts like fraud, a plaintiff can also recover damages for items that are “reasonably foreseeable” to an ordinary person. This standard usually is less technical and more expansive than the traditional contracts “consequential damages” analysis. Using our hypothetical above, Babe may be able to recover lost profits as damages in tort from Ted if he could prove that Ted defrauded Babe when entering the contract.  

Punitive damages, on the other hand, are not available in contracts actions. Punitive damages are damages that are meant to punish the defendant for their intentional or grossly reckless conduct—and to deter future potential defendants from conducting themselves in the same way. Plus, in Florida, punitive damages may only be alleged after a plaintiff gets permission from the Court following a motion and evidentiary proffer. 

No Waitin’ Call Clayton

The elite attorneys at CTL can advise you on the types of damages available in your case. If you or a loved one were involved in a contracts or business dispute, an accident, or a construction site injury, don’t hesitate to give CTL a call for a free case consultation with the premiere Fort Lauderdale, Miami, and West Palm Beach attorneys at CTL.