Direct vs. Consequential Damages in Commercial Contracts: Key Distinctions, Jurisdictional Variations, Drafting
Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
Intermediate
- work Practice Area
Commercial Law
- event Date
Tuesday, March 25, 2025
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE webinar will delve into the distinctions between direct and consequential damages in commercial contracts. The panel will explore the definitions, legal implications, and practical applications of these damages, as well as best practices for drafting and negotiating contract terms to address them.
Mr. Kalas is an associate in the Detroit office and practices in the Business Litigation & Dispute Resolution group. Prior to joining Foley, he was a senior associate at a nationally recognized boutique litigation firm specializing in Class Action and Multi-District Litigation matters. Mr. Kalas also served as a judicial intern for the Honorable George Caram Steeh at the United States District Court for the Eastern District of Michigan. He has experience with all stages of complex litigation — including discovery, motion practice, settlement, and appeals — and is an effective collaborator with both co-counsel and opposing counsel.
Mr. Tamm has nearly a decade of experience helping clients navigate complex disputes. He represents individuals and businesses in state court, federal court, and administrative proceedings, as well as in private arbitrations and government investigations. A former judicial clerk, Mr. Tamm leverages his behind-the-scenes courtroom experience to guide clients through all phases of litigation, from pre-suit investigation to trial and appeal. He also maintains an active pro bono practice. Mr. Tamm's recent pro bono work includes representing an asylum seeker in removal proceedings and representing victims of police violence in civil rights litigation. In addition to his litigation practice, he serves as an adjunct professor at Lewis & Clark Law School, where he coaches the mock trial team and guest lectures on the topics of evidence and trial practice.
Direct damages refer to the immediate losses that result directly from a breach of contract, such as the cost to repair or replace defective goods. Consequential damages, on the other hand, encompass indirect losses that arise from the breach, including lost profits, loss of business opportunities, and reputational harm.
Understanding the differences between these types of damages is crucial for drafting effective commercial contracts. Clear delineation in contract terms can help manage risks and avoid disputes. However, the distinction between direct and consequential damages can be complex and varies by jurisdiction, which can lead to unexpected liabilities.
Therefore, it is essential for counsel to grasp the nuances of these damages, how courts interpret them, and how to draft contract provisions that accurately reflect the parties' intentions. This includes ensuring that terms do not conflict with each other and using other provisions, such as liquidated damages clauses, to mitigate risks.
Listen as our panel of experts discusses the legal and practical aspects of direct and consequential damages in commercial contracts, offering insights and best practices for negotiation and drafting.
- Introduction
- Direct damages
- Consequential damages
- Risks and benefits
- Jurisdictional considerations
- Variations in interpretation: case law examples
- Impact on contract enforcement
- Variations according to contract type
- Interaction with other provisions
- Negotiating and drafting considerations
- Practitioner takeaways
- Key insights and practical tips
The panel will review these and other important considerations:
- What are the key differences between direct and consequential damages, and how do they impact commercial contracts?
- How can counsel draft contract terms to clearly distinguish between these types of damages?
- What are examples of jurisdictional variations in the interpretation of direct and consequential damages, and how should these influence contract drafting?
- How can other contract provisions be used to mitigate risks associated with direct and consequential damages?
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