"Neither party will be liable for any indirect or consequential loss under or in connection with this contract". Breach of Confidentiality ... •Parties sometimes agree to a cap on direct damages (1x, 2x, or 3x amount paid), but clients press to have unlimited liability claims of indemnity, confidentiality, and data breach . Information that is publicly available without breaching the agreement by the receiving party. Not so consequential damages, which require notice to the defendant. The basic test: "remoteness of damages… The judge relied upon a long line of authority, tracing back to Millars Machinery v David Way (1934), to decide that this wording did not exclude liability for damages that are the direct … While we can hardly claim that the … The direct and natural result of the fire was the destruction of the goods and the warehouse, causing lost profits and business interruption losses to the claimants. Here’s the glossary I provided in the earlier of those posts: Direct damages: These are best understood as damages that one would reasonably expect to arise from the breach in question, without taking into account any special circumstances of the nonbreaching party; also referred to as “general” damages. The court held that “lost profits damages may take the form of ‘direct’ damages or the form of ‘consequential’ damages.” Those profits lost on the breached contract itself, such as the … "[16] The court further found that the distinction between direct and consequential damages did not turn on their foreseeability. Against this background, breaches of confidentiality agreements present unique challenges in sorting direct from consequential damages. Indirect Damages. In a disclaimer of consequential damages, parties will include language that disclaims consequential damages if a breach of the NDA occurs. If so, lost profits may be considered direct damages. Any proposal from the Licensee to limit its liability is generally faced with outright rejection for a number of reasons. Direct and consequential damages are categorized on a case-by-case basis. Non-Solicitation or Non-Competition Provisions. Direct damages are those which arise “naturally” or “ordinarily” from a breach of contract; they are damages which, in the ordinary course of human experience, can be expected to result from a breach. (quoting Penncro Assocs., Inc. v. Sprint Spectrum, … The judge relied upon a long line of authority, tracing back to Millars Machinery v David Way (1934), to decide that this wording did not exclude liability for damages that are the direct and natural result of a breach. Those are direct and indirect/consequential damages. It is typically on a party’s list of most important clauses that may require approvals at board level if certain requirements are not met. For example, the following is from Michael A. Epstein, Frank L. Politano, Marc T. Shivers and André J. Brunel, Drafting License Agreements: “Another type of claim that may be carved out from the LOL are claims resulting from the breach of the agreement’s confidentiality provisions, especially when one or both of the parties is giving the other party access to highly confidential information, the release of which would cause the party serious damage by compromising its competitive advantage. “The exclusion is "for any indirect or consequential loss or damage". Hire the top business lawyers and save up to 60% on legal fees. The basic test: "remoteness of damages" Under English law, parties to a contract will not always recover all of their losses. This would allow the NDA to be tailored by requiring destruction of all the notes and summaries that the receiving party has made. But I’m willing to latch on to any additional justification for not having to wade into the exclusion-of-damages mess for purposes of Koncision’s confidentiality-agreement template. 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