Isn’t all loss consequential? A review of recent case law and its relevance to contractual practices within the built environment

Abstract

Purpose

The purpose of this paper is to demystify the meaning of the term “consequential loss” in relation to the practice of construction law. Parties may have different understandings of the term and typically an exclusion clause will not solely relate to consequential loss, but will also include other heads of losses for which the party will not be liable for, such as loss of profit, loss of revenue and loss of business.

Design/methodology/approach

The question emerges as to whether the term consequential loss has a definitive legal meaning in its own right. This study seeks to ascertain the definition of the term consequential loss within the construction industry through a review of the legal position regarding liability for breach of contract and consequential loss through the consideration of the case law relating to this topic and the associated secondary sources of information.

Findings

The study concludes by elucidating a clear interpretation of the term consequential loss and guidance of how it should be used in contract law.

Originality/value

Recent cases and established authorities are considered together for the first time in this work which assists in the development of legal principles of direct and indirect losses and the determination of how they apply to the built environment.

Citation

Connell, A. and Mason, J. (2015), "Isn’t all loss consequential? A review of recent case law and its relevance to contractual practices within the built environment", International Journal of Law in the Built Environment, Vol. 7 No. 3, pp. 176-194. https://doi.org/10.1108/IJLBE-01-2014-0002