Consequential damages are best described as which of the following?

• A. Damages that are always foreseeable.
• B. Damages that are not foreseeable.
• C. Damages that only cover direct losses.
• D. Reasonably foreseeable consequences (like an actor getting sick from the catered food).

Answer: (D)

Foreseeability decides whether damages beyond the immediate loss can be recovered in a contract breach. Consequential damages are those losses that don’t arise directly from the breach but flow from special circumstances known or should have been known by the breaching party when the contract was formed. They must be reasonably foreseeable to be recoverable.

The example of a catered event illustrates this well: if the breach creates downstream problems—like an actor’s illness causing a delay or cancellation in a production—that loss is considered a reasonably foreseeable consequence of failing to deliver the catering. Thus, it captures the essence of consequential damages.

The other options miss this foreseeability requirement or confuse direct versus indirect losses. Damages that are always foreseeable isn’t accurate, not all consequences are foreseeable, and direct losses are simply the immediate damages from the breach, not the extra, downstream losses.