Damages due to a breach of contract can be significant. However, the costliest damages and the hardest to predict are usually consequential damages. These could include, but are not limited to, lost profits, business interruption expenses, and loss of goodwill. Some versions of standard contracts include a mutual waiver of consequential damages.

An example is:

“Neither Contractor nor Owner shall be liable to the other for any consequential losses or damages, whether arising in contract, warranty, tort, negligence, strict liability or otherwise, including but not limited to, loss of use, profits, business, reputation or financing.”
It is possible for a construction contract to have a oneway waiver. Be aware of this so that you do not give up claims for consequential damages but remain liable for them. Also, if the contract is silent on waiving consequential damages, then the parties are likely liable for all consequential damages. This means having a waiver is important. However, if you are contractually liable to an upstream party for consequential damages, then passing that exposure to your subcontractors may be important in mitigating risk.

We hope this helps you understand the construction contracting process a little better. If you have questions about your contract, send us an email or give us a call (https://www.thelienzone.com/contact/). And make sure to check out our other free tools (https://www.thelienzone.com/tools)and our weekly podcast (https://www.thelienzonepodcast.com/).