Contracts update: consequential loss — it's all in the definition
Recent developments in NSW reinforce the importance of not only expressly defining the term ‘consequential loss’ in contracts, but also carefully considering what categories of losses the exclusion is intended to cover, in order to avoid unintended consequences.
Until recently it was generally accepted by parties to contracts, and the courts in Australia, that the term ‘consequential loss’ meant those losses falling under the second limb of losses described in Hadley v Baxendale and which Lord Alderson B categorised as indirect loss (or subjectively foreseeable loss).
These indirect losses were held to be losses which are not a direct consequence of the breach, and were therefore not fairly and reasonably considered as ‘arising naturally’ or ‘in the usual course of things’, from the breach itself. As such, ‘consequential loss’ was not found to encompass damages for loss of profits or expenses incurred to remedy a breach of contract as these were considered outside of that definition…
Click on the link below to read the rest of the DLA Piper briefing.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from DLA Piper
News from The Lawyer
Briefings from DLA Piper
The Australian Taxation Office released a draft ruling on the Goods and Services Tax treatment of bitcoin transactions on 20 August 2014.
DLA Piper’s ‘Life sciences: patent extension strategies and antitrust global update’ video covers global antitrust and competition issues including product hopping and reverse payment patents.
Analysis from The Lawyer
Cross-border work and political tensions are dominating this year’s entries for Finance Team of the Year at The Lawyer Awards.
Regulators are ramping up the pressure in the aftermath of recession, leaving firms to compete for compliance and restructuring work