Contracts II

Indirect Damages


Indirect damages are the amounts awarded for secondary losses resulting from a breach.

Indirect damages are classified as either incidental or consequential.

Incidental Damages

Incidental damages are extra costs incurred by an aggrieved party in dealing with a breach, such as return shipping or time spent finding a replacement.

UCC § 2-710

Seller's Incidental Damages.

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Incidental damages to an aggrieved seller include any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer's breach, in connection with return or resale of the goods or otherwise resulting from the breach.

UCC § 2-715

Buyer's Incidental and Consequential Damages.

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  1. Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.
  2. Consequential damages resulting from the seller's breach include
    1. any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise; and
    2. injury to person or property proximately resulting from any breach of warranty.
Although attorney's fees would conceptually be incidental damages, they are not recoverable unless they are specified as recoverable in the contract, they are granted by statute, or the lawsuit is frivolous or in bad faith.
Consequential Damages

Consequential damages are any other losses incurred as a result of a breach that are not incidental damages, such as lost profit or causing a breach of another contract.