Contracts & ExecutionQuestion 866 of 1632

Consequential (special) damages in a breach case are damages that:

a.Equal the contract price, since the breach denied the whole bargain
b.Compensate the injured party without proof of any actual loss
c.Follow directly and immediately from the breach itself, without more
d.Arise from the injured party's circumstances and were foreseeable at formation

Explanation

Consequential or special damages flow from the injured party's particular situation — profits lost on the next job because this one ran late — and Civil Code §3300 limits recovery to detriment that was likely to result in the ordinary course or that the breaching party had reason to foresee, the rule of Hadley v. Baxendale. (c) describes GENERAL or direct damages, which follow from the breach itself and need no special showing of foreseeability; the contrast between the two is the entire point of the category. (b) describes nominal damages, awarded under Civil Code §3360 when a right is invaded but no loss is proved. (a) confuses the measure with the price; consequential damages can exceed the contract price, which is exactly why commercial contracts so often waive them.

Law Reference: Civil Code §3300, §3360

This topic, taught in full in the CSLB Law & Business guide. CSLB Law & Business — Complete Study Guide (2026) — PDF + EPUB, $24.99 · 14-day refund →

Practice all 1632 questions free — no signup required.

Own the complete CSLB Law & Business guide — PDF + EPUB, $24.99 →

Related questions on this topic

Last reviewed: · editorial process

PrepPass team · Verified against California CSLB Contractor License Law & Business Exam · How we review
Reviewed by Abraham Chen — Licensed California General Contractor (CSLB License #1101856 — verify)
Report