I have a friend who was negotiating a contract with a future distributor of his product range. In the draft contract was an innocuous little clause about consequential damages, which he nearly skipped over. Not good, and here’s why.
A consequence is something that happens as a result of something else happening.
If I have a new carpet fitted at home and a piece that’s sticking up causes me to trip and stab myself with a carving knife, then the consequence of the sticky-up carpet is the injury I sustained, which in turn caused me miss a flight, so I didn’t examine the worsening crack in the road bridge and, therefore, didn’t close the road before 20 people lost their lives when the bridge collapsed.
Is the carpet fitter liable for the deaths of 20 people because of his negligence in poorly fitting the carpet? Some contracts might try to assert that he is. Or maybe the carpet manufacturer is at fault. On the other hand I might have been a bit more careful in carrying sharp knives around the house. So it's my fault
Danger lurks when you get out of bed each morning, and the things you do might, regrettably, hurt someone else. It’s just the way life works.
If your customer asks for consequential damages, be very careful. You will need to warrant that what you’re selling them is fit for the purpose they purchased it for, and that it complies with the performance specification and meets the required safety criteria. But you cannot be held liable for what happens when they sell it on to their customers. That’s the business risk they take as a result of making a profit from doing business with you. They should not be asking you to mitigate that risk for them.
Just politely decline, and get on with carving the roast.
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