In a recent case, a design professional tried to argue it had a “get out of jail free” costs for repair and remediation costs an owner sustained due to structural engineering errors and omissions. The “get out of jail” free card was based on a waiver of consequential damages in their contract. The contract, however, did NOT define consequential damages which gave the design professional the argument that the damages the owner claimed should be deemed consequential. The trial court, finding that such damages were NOT consequential in nature and not contractually waived by the owner, discussed the difference between consequential and direct damages (see below). In doing so, though, the trial court explained:
Based on the definitions of the relevant terms and the facts of this case, the Court finds that [Owner’s] costs of remediation and repair are not consequential damages that were waived in the Agreement. [Design Professional] was contractually obligated to provide plans, including structural engineering plans, for the construction of a hospital in a large project coordinated among many sophisticated parties. The costs of remediation and repair did not “result indirectly from” [Design Professional’s] plans, nor did they arise from “dealings with third parties” in either the more “traditional” sense (such as lost profits or loss of reputation) or the causative way described by the Keystone Airpark court. Instead, the costs to repair and remediate are the “direct, natural, logical[,] and necessary consequences of” [Design Professional’s] deficient plans. Thus, recovery of these damages is not barred by the consequential-damages waiver in the Agreement.
Orlando Health, Inc. v. HKS Architects, Inc., 2025 WL 1919349, *7 (M.D.Fla. 2025) (internal citations and footnotes omitted).
While a waiver of consequential damages in construction contracts are commonplace, there are implications which need to be discussed and vetted during the preparation and negotiation of the contract.
Difference Between Consequential Damages and Direct Damages
Florida courts have defined “consequential damages” as damages that “do not arise within the scope of the immediate buyer seller transaction, but rather stem from losses incurred by the non-breaching party in its dealings, often with third parties, which were a proximate result of the breach, and which were reasonably foreseeable by the breaching party at the time of contracting.” “The most common form of consequential damages is lost profits.” Other examples of losses typically regarded as falling into this category are reputational damage … rental expenses, and loss of use, id.
On the other hand, direct damages—sometimes also referred to as “general damages” —“are commonly defined as those damages which are the direct, natural, logical and necessary consequences of the injury.” They “naturally and necessarily flow or result from the injuries alleged” and “may be described as those damages ‘as may fairly and reasonably be considered as arising in the usual course of events from the breach of contract itself.’ ”
Orlando Health, Inc. v. HKS Architects, Inc., 2025 WL 1919349, *4 (M.D.Fla. 2025) (internal citations and footnotes omitted).
