Which of the following best describes consequential damages?

Consequential damages refer to indirect losses that occur as a result of an event or action, rather than as a direct result of a contract or agreement. These types of damages are typically not the immediate or direct results of a failure to perform but rather are losses that arise as a consequence of that failure. For example, if a project is delayed or a construction defect leads to an issue, the contractor or owner may suffer a loss of reputation, client trust, or future business opportunities as a result. These impacts are not quantified in the project costs directly but represent significant financial implications nonetheless.

Understanding consequential damages is crucial in construction management, particularly in contract negotiations and dispute resolution. This concept emphasizes the importance of considering not just the immediate financial consequences of a breach or failure in performance, but also the broader impacts that can ripple through a business, often leading to long-term financial detriment.