The Court held that the express wording of the limitation clause in Dow excluded only "loss of profits and damages arising in the context of indirect or consequential damages " (emphasis added). Understanding Consequential Damages-Consequential damages are also termed as special damages. Lost profits from lost opportunities to conclude other deals would be consequential damages, but lost profits related to the contract between the parties would be direct damages. There are two types of damages recoverable as lost profits: (1) lost profits that are general damages; and (2) lost profits that are consequential or special damages. v. State of Karnataka and ors. The rule regarding lost profits as a matter of special, or consequential, damages stems from Hadley v. The form provides that if the insured faces a claim for lost profits because a particular contract does not contain a consequential damages waiver and/or limitation of liability clause, the insurer may deny coverage for the lost profits part of the claim if the insurer, in its discretion, believes that the absence of such clauses from the contract was not reasonable. The amount of such damages is an issue of fact to be decided by the fact finder. UpCounsel accepts only the top 5 percent of lawyers to its site. Consequential Damages — consequential damages are an indirect result of a direct loss. Since these lost profits were found to “arise naturally” from a breach of contract, the Court concluded that- in this case- the lost profits were “direct damages.” The Court held that the express wording of the limitation clause in Dow excluded only “loss of profits and damages arising in the context of indirect or consequential damages ” (emphasis added). – Consequential damages are also a form of compensation. The answer to this question often can mean the differ-ence between a case that involves nominal damages, such as costs and expenses to cure a breach, and a bet-the-company litigation involv-ing the potential recovery of millions of dollars of lost profits. 2013), explained: On the other hand, lost profits were deemed consequential damages in Burrus v. Itek Corp., 46 Ill. App. Id . Loss of profits are recoverable upon proper proof both in contract and tort cases. They are recoverable in … The dispute in Tractebel arose out a contract for the … these often include overhead expenses, delay damages, lost profits if a company was going to incorporate or resell the goods to another party; damages arising out of loss of use of the capital). The district court further determined that lost profits from two of SOLIDFX’s apps qualified as direct damages, while lost profits from two other apps were properly classified as consequential damages.1 Lost Profits as “Consequential” Damages. Lost profits as consequential, or special damages, do not “directly flow from the breach.” American List Corp., 75 N.Y.2d at 43. Thus, for example, one form of damages, e.g., lost profits, may be found to be Consequential dam - ages, however, are more difficult to establish and are subject to a higher burden of proof.2 In practice, the line between direct and consequential damages can only be drawn in the context of the spe-cific facts of an individual case. 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