DealLawyers.com Blog

We lawyers sometimes get in our own way by using terms that we think are well-defined and understood by us and other lawyers — and, most importantly, the courts — but aren’t always so straightforward. The often used and misunderstood term “consequential damages” is a good example of this, and in a recent blog, Weil’s Glenn West suggests that maybe we shouldn’t use it so much. This isn’t the first time Glenn has made this suggestion. Last year, when sharing another blog by Glenn on this topic, John noted that a “court’s idiosyncratic interpretation of the term might result in the buyer waiving rights to damages that it did not intend to waive.”

Glenn gives this latest reminder following the opinion in Endless River Technologies LLC v. Trans Union LLC (N.D. Ohio; 1/23), in which the court had to address the issue of whether lost profits awarded by a jury constituted consequential damages since the damages waiver excluded consequential damages, including lost profits, as opposed to independently excluding “damages based upon lost profits of any kind.” This is because “not all lost profits are in fact consequential damages, and consequential damages are not limited to just lost profits.”

While the Federal District Court ultimately found that the lost profits awarded by the jury here were consequential damages, no one wants to tell a client that there’s a chance they will be liable for lost profits when they thought they were fully waived, and this seems like an example where simplified drafting would have been better understood by all involved. I may even go so far as to say “including but not limited to” should be added to the list of overused lawyer phrases.

– Meredith Ervine