Do Consequential Damages Include Lost Profits?

However, not all lost profits constitute consequential damages. The vast majority of courts agree that lost profits may be either direct or consequential damages, depending on the circumstances surrounding the particular contract and parties.

What type of damages is lost profits?

In most cases, lost profits are considered indirect damages, which parties can exclude in a damages limitation clause. [1] With recovery of damages barred by the contract, the only avenue to recover lost profits is through tort liability. Finding no recourse under contract, litigants might turn to tort law.

What do consequential damages include?

Commonly, consequential damages include property damage, personal injury, attorneys' fee, lost profits, loss of use, liability of buyer to customers, loss of goodwill, interest on money withheld by customers, and damages related to third party claims.