Commercial contracts contain “terms and conditions” that are often the same from contract-to-contract. A very common term is one that excludes the recovery of consequential damages.
Let’s say your business is selling washing machines to a real estate company that manages apartment buildings. You want to make sure that your contract contains a prominent provision limiting the real estate company’s recovery to the price of the washing machines. In other words, if one of the machines breaks down, they may be able to sue you for the full cost. But can they sue you for water damage caused by a malfunctioning machine? Probably not, if the contract limits the recovery of “consequential damages.”
Every situation turns on its specific facts. There are few absolutes in the law. But this kind of contractual provision can provide a powerful protection.
If you end up being sued and the company seeks to collect consequential damages, your attorney can bring a motion to have at least that part of the case thrown out. And there may be other parts of the contract that allow the whole case to be dismissed.
When you or your business enter into a contractual relationship, the terms and conditions in that written agreement may have profound effect down the road – it’s important to think ahead. And if you do end up in a lawsuit, you should hire an attorney that understands the impact of clauses like those discussed in this article.
To learn if these kinds of clauses can be enforced by Massachusetts courts, click here.
To explore an example of this type of clause, click here.
