Consequential Damage Claims




Consequential damages arise out of special circumstances that are usually unpredictable, and are typically more expensive than direct damages. Most professional liability programs cover such damages as long as they result from negligence in providing professional services.

In order to reduce liability, you may try to negotiate a waiver of consequential damages with your client. Victor O. Schinnerer suggests the below, which is in EJCDC E-500, Standard Form Agreement Between Owner and Engineer for Professional Services:

Mutual Waiver: To the fullest extent permitted by law, Owner and Engineer waive against each other, and each others employees, officers, directors, members, agents, insurers, partners, and consultants, any and all claims for or entitlement to special, incidental, indirect, or consequential damages arising out of, resulting from, or in any way related to the Project.

If your sub-consultant asks to include a mutual waiver of consequential damages in the sub-consulting agreement, be sure to have a corresponding waiver in the prime agreement with the owner. Remember to review contracts carefully, speak with your broker, and consult an attorney with questions.

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