This contract tip is about consequential damages that apply even when the parties have a waiver in their contract.
Including a waiver of consequential damages does not mean that you are free and clear. Here are four ways you may still face consequential damages relating to the agreement:
1. Your waiver exceptions - Yes, you waived most consequential damages, but these provisions usually have exceptions. If the exceptions are broadly drafted, such as any breach of the sections on intellectual property or confidentiality, you may have a lot of exposure to potential consequential damages.
2. Judgment against your counterparty - Your indemnity clause may obligate you to reimburse your counterparty for all losses and damages paid to a third party that arose from your product or services. If your counterparty pays consequential damages to a third party, you may have to reimburse those.
3. Failure of the essential purpose - If your warranty has an inadequate exclusive remedy, your entire waiver of consequential damages may be unenforceable depending on your jurisdiction and the reasonableness of your liability cap.
4. Unconscionable - Courts may not enforce consequential damages waivers that are unconscionable.
Are there other reasons that should be added to this list?
