What are considered indirect damages?

Asked by: Dr. Jordi Johns MD  |  Last update: February 19, 2022
Score: 5/5 (63 votes)

Indirect damages refers to all the knock-on effects on the contract breach

contract breach
In legal theory, particularly in law and economics, efficient breach is a voluntary breach of contract and payment of damages by a party who concludes that they would incur greater economic loss by performing under the contract.
https://en.wikipedia.org › wiki › Efficient_breach
on the non-breaching party – all the non-immediate consequences that might happen. ... Indirect damages have all sorts of labels: consequential, incidental, indirect, exemplary, special, enhanced, punitive, etc.

What are examples of indirect damages?

Indirect Damages means loss of production, loss of profit, loss of use, loss of contracts or any other indirect loss.

What are direct damages vs indirect damages?

Direct damages for a vendor include lost profits. Vendor lost profits as a direct result of the breach. For the buyer, lost profits are an indirect damage. Buyer lost profits as an indirect consequence of Vendor, for example, not supplying goods, which is the direct damage.

Are compensatory damages direct or indirect?

When a contract is breached, the recognized remedy for an owner is recovery of damages that result directly from the breach (also known as "compensatory damages"). Damages may include the cost to repair or complete the work in accordance with the contract documents, or the value of lost or damaged work.

Are punitive damages indirect damages?

Consequential damages are also commonly referred to as “indirect damages” because they arise indirectly from a breach due to various events that flow from a breach. ... Punitive damages are intended to punish and deter certain behavior and may not be tied to the relevant economic loss of the aggrieved party.

What are Consequential Damages

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What is an indirect breach?

In assessing damages for breach of contract: Consequential loss (also known as indirect loss) arises from a special circumstance of the case, not in the usual course of things. ... Direct loss is the natural result of the breach in the usual course of things.

Are consequential and indirect damages the same?

Consequential damages are also referred to as special damages or indirect damages. Such indirect damages are damages that do not necessarily flow from the breach of contract but are secondary in nature or indirect to breach.

What are direct and indirect losses?

Direct losses refer to the physical or structural impact caused by the disaster such as the destruction of infrastructure caused by the force of high winds, flooding or ground shaking. Indirect effects are the subsequent or secondary results of the initial destruction, such as business interruption losses.

What are considered direct damages?

Direct damages are “the necessary and usual result of the defendant's wrongful act; they flow naturally and necessarily from the wrong.”[1] Direct damages are intended to compensate the plaintiff for the loss incurred that was foreseeable by the defendant from his wrongful act.

What does indirectly mean in a contract?

8. directly or indirectly means you acting either alone and on your own behalf or jointly with or on behalf of any other person, firm or company, whether as principal, partner, manager, employee, contractor, director, consultant, investor or otherwise.

What are examples of consequential damages?

Examples of Consequential Damages.
  • Loss of anticipated profits;
  • Loss of business;
  • Cost of unsuccessful attempts to repair defective goods;
  • Loss of goodwill;
  • Losses resulting from interruption of buyer's production process;
  • Loss of reputation; and.
  • Loss of sales contracts because of delayed products.

Are direct damages the same as compensatory damages?

General damages are a direct result of the defendant's wrongful conduct, and special damages are unique to the party affected by the defendant's breach of contract. ... Compensatory damages are not designed to punish a breaching party; rather, their purpose is to make the non-breaching party whole again.

What are considered special damages?

In tort law, special damages are damages like car dents or medical expenses that can actually be ascertained, and they are contrasted with general damages, which refer to damages for things like intentional infliction of emotional distress which do not have a set monetary cost.

Which of the following comes under indirect losses?

Indirect Losses means loss of profits, loss of use, loss of production, increased operating costs, loss of business, loss of business opportunity, loss of reputation or goodwill or any other consequential or indirect loss of any nature, whether arising in tort or on any other basis.

Are incidental damages actual damages?

Compensatory damages compensate for the special loss suffered; consequential damages compensate for the foreseeable consequences of the breach; incidental damages compensate for the costs of keeping any more damages from occurring; nominal damages are awarded if the actual amount cannot be shown or there are no actual ...

Does an indemnity cover indirect losses?

From a practical perspective, some types of loss, such as loss of profits, can be considered direct as well as indirect, so ideally the indemnity should be clear as to what types of loss it covers and doesn't cover, as well as whether such losses arise directly or indirectly from a given breach.

What are incidental damages in contract law?

Incidental damages are incidental expenses incurred by the non-breaching party in order to avoid other direct and consequential losses of breach.

What are the different kinds of damages?

  • ACTUAL/ COMPENSATORY DAMAGES. Purpose. Actual or compensatory damages simply make good or replace the loss caused by the wrong. ...
  • MORAL DAMAGES. Purpose. ...
  • NOMINAL DAMAGES. Purpose. ...
  • TEMPERATE DAMAGES. Purpose. ...
  • LIQUIDATED DAMAGES. Purpose. ...

Which is the best example of an indirect loss?

Indirect Loss Insurance Example

If a tornado destroys the roof of a store, not only are there rebuilding costs, but the business cannot operate until the damage is fixed. Income lost during the rebuilding -- and after it, if customers stick with the alternatives they find in the meantime -- represents an indirect loss.

What is indirect loss in risk management?

A loss or damage that results from an insured's inability to use his/her property because of direct loss to the property of others.

What are the indirect losses associated with a landslide?

Some examples of indirect landslide losses are: 1. Loss of industrial, agricultural, and forest productivity and tourist revenues as a result of damage to land or facilities or interruption of transportation systems; 2.

Are incidental damages indirect damages?

Indirect damages refers to all the knock-on effects on the contract breach on the non-breaching party – all the non-immediate consequences that might happen. ... Indirect damages have all sorts of labels: consequential, incidental, indirect, exemplary, special, enhanced, punitive, etc.

Are third party claims indirect damages?

A party's out-of-pocket costs for damages recovered by a third party shall be deemed to be indirect damages suffered by such party, except to the extent such damages are part of a claim for which indemnification is due under Section 4.

What are non consequential damages?

The term does not include exemplary damages or damages for physical pain and mental anguish, loss of consortium, disfigurement, physical impairment, or loss of companionship and society.

What are certain losses?

Any Losses resulting from the manufacture, use, handling, storage, sale or other disposition of Products in the U.S.