Common use of Practice Tip Clause in Contracts

Practice Tip. Boilerplate consequential damages waivers often include a laundry list of excluded damages, such as lost profits, that are written as additional to the exclusion of consequential damages. This has the potential to go beyond the intentions of the parties, as lost profits in some circumstances qualify as the proper measure of direct damages. An easy fix is to reference lost profits, etc. as a parenthetical subset of con- sequential damages. The drafters of the Uniform Commercial Code generally followed the framework from Hadley32 and added extensions and refinements that are beyond the scope of this discussion. Of particular note, however, is the following, per White & Xxxxxxx: “[W]henever a defective component part causes an accident that damages an entire product, a large part of the total damage may be consequential.”33 In addition, some commentators believe (and the author agrees) that a significant portion of the damages that flow from a breach of con- fidentiality is likely to be consequential.34 It is important to note that not all courts would agree with the foregoing framework. Some courts seem to be moving away from the Xxxxxx approach and have stated, for example, that market-measured damages (that is, the difference between the value of the thing as promised and the value of the thing as actually provided) are the proper measure of direct damages and everything else is either con- sequential or indirect damages.35 Seen in light of the foregoing definitions, an exclusion of conse- quential damages may seem unfair to the aggrieved party—quite 32. WHITE & XXXXXXX, supra note 10, § 11:7. 33. Id. § 11:8, at 989 n.7.

Practice Tip. Boilerplate consequential damages waivers often include a laundry list of excluded damages, such as lost profits, that are written as additional to the exclusion of consequential damages. This has the potential to go beyond the intentions of the parties, as lost profits in some circumstances qualify as the proper measure of direct damages. An easy fix is to reference lost profits, etc. as a parenthetical subset of con- sequential damages. The drafters of the Uniform Commercial Code generally followed the framework from Hadley32 Hadley30 and added extensions and refinements that are beyond the scope of this discussion. Of particular note, however, is the following, per White & Xxxxxxx: “[W]henever a defective component part causes an accident that damages an entire product, a large part of the total damage may be consequential.”33 ”31 In addition, some commentators believe (and the author agrees) that a significant portion of the damages that flow from a breach of con- fidentiality is likely to be consequential.34 consequential.32 It is important to note that not all courts would agree with the foregoing framework. Some courts seem to be moving away from the Xxxxxx approach and have stated, for example, that market-measured damages (that is, the difference between the value of the thing as promised and the value of the thing as actually provided) are the proper measure of direct damages and everything else is either con- sequential or indirect damages.35 Seen in light of the foregoing definitions, an exclusion of conse- quential damages may seem unfair to the aggrieved party—quite 32damages.33 30. WHITE & XXXXXXX, supra note 108, § 11:7. 3331. Id. § 11:8, at 989 n.7. 32. XXXXXXX X. XXXXXXX, ET AL., DRAFTING LICENSING AGREEMENTS § 8.09 (2014); Xxxxx X. Xxxxx & Xxxxxxx X. Xxxxx, Managing Confidential Relationships in Intellectual Property Transactions: Use Restrictions, Residual Knowledge Clauses, and Trade Secrets, 25 REV. LITIG. 311, 342 (2006).

Practice Tip. Boilerplate consequential damages waivers often include a laundry list of excluded damages, such as lost profits, that are written as additional to the exclusion of consequential damages. This has the potential to go beyond the intentions of the parties, as lost profits in some circumstances qualify as the proper measure of direct damages. An easy fix is to reference lost profits, etc. as a parenthetical subset of con- sequential damages. The drafters of the Uniform Commercial Code generally followed the framework from Hadley32 Hadley30 and added extensions and refinements that are beyond the scope of this discussion. Of particular note, however, is the following, per White Xxxxx & Xxxxxxx: “[W]henever a defective component part causes an accident that damages an entire product, a large part of the total damage may be consequential.”33 ”31 In addition, some commentators believe (and the author agrees) that a significant portion of the damages that flow from a breach of con- fidentiality is likely to be consequential.34 consequential.32 It is important to note that not all courts would agree with the foregoing framework. Some courts seem to be moving away from the Xxxxxx approach and have stated, for example, that market-measured damages (that is, the difference between the value of the thing as promised and the value of the thing as actually provided) are the proper measure of direct damages and everything else is either con- sequential or indirect damages.35 damages.33 Seen in light of the foregoing definitions, an exclusion of conse- quential damages may seem unfair to the aggrieved party—quite 3230. WHITE & XXXXXXX, supra note 108, § 11:7. 3331. Id. § 11:8, at 989 n.7.

Practice Tip. Boilerplate consequential damages waivers often include a laundry list of excluded damages, such as lost profits, that are written as additional to the exclusion of consequential damages. This has the potential to go beyond the intentions of the parties, as lost profits in some circumstances qualify as the proper measure of direct damages. An easy fix is to reference lost profits, etc. as a parenthetical subset of con- sequential damages. The drafters of the Uniform Commercial Code generally followed the framework from Hadley32 and added extensions and refinements that are beyond the scope of this discussion. Of particular note, however, is the following, per White Xxxxx & Xxxxxxx: “[W]henever a defective component part causes an accident that damages an entire product, a large part of the total damage may be consequential.”33 In addition, some commentators believe (and the author agrees) that a significant portion of the damages that flow from a breach of con- fidentiality is likely to be consequential.34 It is important to note that not all courts would agree with the foregoing framework. Some courts seem to be moving away from the Xxxxxx approach and have stated, for example, that market-measured damages (that is, the difference between the value of the thing as promised and the value of the thing as actually provided) are the proper measure of direct damages and everything else is either con- sequential or indirect damages.35 Seen in light of the foregoing definitions, an exclusion of conse- quential damages may seem unfair to the aggrieved party—quite 32. WHITE & XXXXXXX, supra note 10, § 11:7. 33. Id. § 11:8, at 989 n.7.

Practice Tip. Boilerplate consequential damages waivers often include a laundry list of excluded damages, such as lost profits, that are written as additional to the exclusion of consequential damages. This has the potential to go beyond the intentions of the parties, as lost profits in some circumstances qualify as the proper measure of direct damages. An easy fix is to reference lost profits, etc. as a parenthetical subset of con- sequential damages. The drafters of the Uniform Commercial Code generally followed the framework from Hadley32 Hadley30 and added extensions and refinements that are beyond the scope of this discussion. Of particular note, however, is the following, per White & Xxxxxxx: “[W]henever a defective component part causes an accident that damages an entire product, a large part of the total damage may be consequential.”33 ”31 In addition, some commentators believe (and the author agrees) that a significant portion of the damages that flow from a breach of con- fidentiality is likely to be consequential.34 consequential.32 It is important to note that not all courts would agree with the foregoing framework. Some courts seem to be moving away from the Xxxxxx approach and have stated, for example, that market-measured damages (that is, the difference between the value of the thing as promised and the value of the thing as actually provided) are the proper measure of direct damages and everything else is either con- sequential or indirect damages.35 damages.33 Seen in light of the foregoing definitions, an exclusion of conse- quential damages may seem unfair to the aggrieved party—quite 3230. WHITE & XXXXXXX, supra note 108, § 11:7. 3331. Id. § 11:8, at 989 n.7.