A Question of Consequence: A Definitive Report on Incidental and Consequential Damages in Commercial Contracts

Part I: The Foundations of Contract Damages

Section 1: The High Stakes of a Breach

In the world of commercial agreements, a breach of contract is more than a mere failure to perform; it is an event that can trigger a cascade of financial and operational consequences, threatening the very stability of an enterprise.

The legal framework governing contract damages is designed to address these consequences, fundamentally aiming to place the non-breaching party in the same financial position they would have occupied had the contract been fully and properly performed.¹

This principle, often referred to as protecting the “expectation interest,” is the bedrock of contract remedies.³

However, the path to making an injured party whole is fraught with complexity.

The financial stakes can be astronomical, with potential damages far exceeding the original value of the contract itself, creating what are often termed “bet-the-company” propositions.³

A seemingly minor failure—a delayed delivery, a defective component, a software bug—can ripple through a business, causing factory shutdowns, lost sales, and reputational harm that dwarf the direct cost of the breach.⁶

The sheer scale of these potential liabilities transforms the legal doctrine of damages from a reactive tool for dispute resolution into a proactive force that shapes commercial behavior.

The potential for a court to award astronomical damages incentivizes rational commercial actors to invest heavily in due diligence, performance monitoring, and, most critically, the meticulous negotiation of contractual clauses that limit and allocate liability.

This reality elevates contract negotiation from a simple deal-making exercise focused on price and deliverables into a sophisticated risk allocation process, where managing potential damages is as important as defining primary obligations.⁶

Section 2: Deconstructing Damages: Direct, Incidental, and Consequential

To navigate the risks of a breach, one must first understand the distinct categories of damages a court may award.

In contract law, these are broadly classified into three types: direct, incidental, and consequential.

The distinctions between them are frequently misunderstood, even by lawyers and judges, yet they are fundamental to assessing liability.⁹

Direct (or General) Damages

Direct damages, also known as general or actual damages, are those that “naturally flow” from a breach of contract.10 They represent the most immediate and obvious loss, compensating the non-breaching party for the loss of the bargain itself.3 These are the damages that any reasonable person would expect to result directly from a failure to perform.

Common examples include the cost to repair faulty work performed by a contractor, the additional cost of purchasing replacement goods from another seller after a supplier fails to deliver, or a refund of the price paid for a service that was not rendered.1

Incidental Damages

Incidental damages are the reasonable expenses incurred by the non-breaching party in the process of dealing with the breach and trying to mitigate further losses.1 They are the commercially reasonable “clean-up costs” associated with the immediate aftermath of the breach.

The Uniform Commercial Code (UCC), which governs the sale of goods in the United States, provides clear examples for both buyers and sellers.

• Buyer’s Incidental Damages (UCC § 2-715(1)): When a seller breaches, the buyer may incur costs for inspecting or storing rightfully rejected goods, transporting them back to the seller, and any commercially reasonable charges related to “effecting cover”—the act of finding and purchasing substitute goods.¹¹ For instance, if a bakery’s primary strawberry supplier fails to deliver, the costs of expedited shipping from a new, more distant farm and the fees for an independent quality inspection of the new berries would be considered incidental damages.¹
• Seller’s Incidental Damages (UCC § 2-710): Conversely, if a buyer breaches (e.g., by wrongfully rejecting goods), the seller can recover incidental damages such as the costs of stopping delivery, transporting and storing the goods after the breach, and any commissions or expenses associated with reselling the goods to another party.¹

Consequential (or Special) Damages

This category represents the most significant financial risk and is the source of the most intense legal battles.

Consequential damages, also called special damages, are indirect losses that result from a breach due to the unique or “special circumstances” of the non-breaching party.3 They do not flow directly from the breach itself but from its downstream consequences.6

Under the UCC, the standard for recovering consequential damages is twofold.

First, the loss must result from general or particular requirements and needs that the seller “had reason to know” about at the time of contracting.

Second, the loss must be one that “could not reasonably be prevented by cover or otherwise”.¹¹

This “reason to know” standard is critical; the seller does not need to have consciously accepted liability as an insurer, but if the buyer’s special needs were foreseeable, the seller may be on the hook.¹⁵

Common examples of consequential damages are extensive and can include:

• Lost profits from collateral business arrangements.¹⁶
• Loss of use of a facility or piece of equipment.³
• Lost income or rent.¹⁷
• Damage to business reputation or loss of customer goodwill.⁶
• Lost bonding capacity, insolvency, or increased financing costs.³

The following table provides a comparative summary of these damage types.

Damage Type	Core Concept	Legal Basis (UCC)	Key Test	Classic Example
Direct/General	Compensates for the direct loss of the bargain itself.	N/A (Common Law)	The “natural and necessary” result of the breach.	The cost to repair a defective widget delivered by a seller.
Incidental	Reimburses reasonable expenses incurred to mitigate the breach.	§ 2-715(1) & § 2-710	A “reasonable expense” incurred in direct response to the breach.	The cost to ship the defective widget back to the seller for repair.
Consequential/Special	Compensates for foreseeable indirect losses due to special circumstances.	§ 2-715(2)	The loss was “reasonably foreseeable” to the breaching party at the time of the contract.	Lost profits from a factory shutdown because the defective widget broke a key machine.

Part II: Navigating the Gray Areas: Ambiguity and Interpretation

Section 3: The Blurry Line and the Foreseeability Test

While the definitions of direct, incidental, and consequential damages appear distinct in theory, their application in practice is notoriously difficult.

Courts and legal scholars alike acknowledge that the line between direct and consequential damages is “blurry,” “hard to define,” and “not a bright one,” making it a recurring subject of high-stakes litigation.³

This ambiguity traces its roots to the seminal 19th-century English case of Hadley v.

Baxendale, which established the foundational two-part test for recoverable damages in contract law.²

The first “limb” of the

Hadley rule allows for the recovery of direct damages—those that arise naturally and “in the usual course of things” from the breach.

The second limb allows for the recovery of consequential damages—those arising from special circumstances that were communicated to and thus reasonably contemplated by both parties at the time the contract was made.²

The modern UCC has codified and evolved this standard.

Under UCC § 2-715(2), a breaching seller is liable for any loss resulting from the buyer’s general or particular needs of which the seller “at the time of contracting had reason to know”.¹¹

This “reason to know” test is an objective one.

It does not require proof that the seller consciously accepted an “insurer’s liability” for all possible downstream effects of a breach.¹⁵

Rather, it focuses on what was reasonably foreseeable.

Particular needs of a buyer must generally be made known to the seller, but general needs (such as the need for a commercial bakery to have a functioning oven) rarely need to be explicitly stated to charge the seller with knowledge.¹⁵

A crucial check on the recovery of consequential damages is the duty to mitigate.

The law does not permit a non-breaching party to let damages accumulate when they could have been reasonably avoided.

Therefore, consequential damages are not recoverable if the loss “could not reasonably be prevented by cover or otherwise”.¹¹

The “blurriness” of the line separating direct from consequential damages is, in many ways, a deliberate feature of the common law system, providing a flexible standard that can adapt to novel commercial situations.

This flexibility, however, comes at the steep price of predictability.

It is this fundamental tension—the need for an adaptable rule versus the commercial demand for certainty—that drives the entire market for contractual risk allocation.

Businesses are not merely contracting for goods and services; they are actively contracting to replace the unpredictable, court-imposed “blurry line” of foreseeability with their own privately-negotiated, precisely-defined “bright line” in the form of waivers and liability limitations.

The ambiguity of the default legal rule creates the business case for investing significant time and legal expense in drafting clauses that substitute certainty for the inherent uncertainty of litigation.

Section 4: The Battleground of Lost Profits

Nowhere is the line between direct and consequential damages more contested than in claims for lost profits.

While lost profits are often cited as the quintessential example of consequential damages, this is a dangerous oversimplification.

As numerous court cases have shown, “not all lost profits are consequential damages”.⁹

This distinction has become the epicenter of contractual disputes, as its resolution can determine whether a multi-million dollar claim is recoverable or barred by a waiver clause.

The critical distinction lies in whether the lost profits were the direct object of the contract or a collateral consequence of its breach.

• Lost Profits as Direct Damages: Profits are considered direct damages when they represent the very benefit the non-breaching party bargained for. In such cases, the loss of profit is not an indirect ripple effect; it is the immediate and direct failure of the contract to deliver its promised value. A classic example is the wrongful termination of a long-term service or manufacturing contract. The non-breaching party’s direct damages would be the net profit it was denied the opportunity to earn from that specific contract.⁹ Similarly, in contracts where a reseller purchases goods for the express purpose of reselling them, the profit from that resale may be considered a direct damage. The profit is not from a collateral transaction but is the primary and immediate purpose of the agreement.³
• Lost Profits as Consequential Damages: Profits are properly classified as consequential damages when the breach of a primary contract causes the non-breaching party to lose profits on separate, collateral business arrangements.¹⁶ For example, if a supplier fails to deliver a critical machine part, the buyer’s direct damage is the cost of acquiring a replacement part (the cost to “cover”). If the delay in getting that part causes the buyer’s factory to shut down, preventing it from fulfilling orders to its own customers, the profits lost on those separate sales orders are consequential damages.¹ The ability to generate those profits was contingent on the performance of the primary contract, but the profits themselves were to be earned from other transactions.

The landmark case of Biotronik A.G. v.

Conor Medsystems Ireland, Ltd. powerfully illustrates this distinction.

In that case, a manufacturer terminated an exclusive distribution agreement.

The distributor sued for the substantial profits it lost because it could no longer sell the manufacturer’s products.

The manufacturer argued these lost profits were consequential damages and thus barred by a waiver in the contract.

The New York Court of Appeals disagreed, holding that the lost profits were direct damages.⁴

The court reasoned that the profits from the resale of the manufacturer’s stents were not from ancillary or collateral arrangements; they were the “very essence” and the direct fruit of the exclusive distribution agreement itself.

The entire purpose of the contract, from the distributor’s perspective, was to earn those profits.

Therefore, to bar their recovery would be to deny the distributor the fundamental benefit of its bargain.⁴

This case serves as a stark warning that courts will scrutinize the nature of a contract and may refuse to enforce a boilerplate waiver when it produces an inequitable result.

The evolution of judicial thought on this topic can be traced through several key precedents.

Case	Court/Year	Core Issue	Holding	Enduring Impact
Hadley v. Baxendale	Court of Exchequer/1854	Defining the scope of recoverable damages for breach of contract.	Established the two-limb test for foreseeability: damages must arise naturally or be from special circumstances known to both parties.	The foundation of all modern consequential damages law in common law jurisdictions.
Perini Corp. v. Greate Bay Hotel & Casino	NJ Supreme Court/1992	Recoverability of massive lost profits from a construction delay.	Held that millions in lost profits were foreseeable and recoverable as consequential damages against a contractor with a small fee.	Sent “shockwaves” through the construction industry, spurring the widespread adoption of consequential damage waivers in standard contracts.
Biotronik A.G. v. Conor Medsystems	NY Court of Appeals/2014	Classification of lost profits under a consequential damages waiver in a distribution agreement.	Ruled that lost profits from an exclusive distribution deal are direct damages, not consequential, as they are the essence of the contract.	Showcased judicial willingness to classify lost profits as direct to avoid inequitable outcomes from boilerplate waivers, forcing more precise drafting.

Part III: Strategic Risk Allocation in Practice

Section 5: The Waiver of Consequential Damages: A Critical Shield

Given the ambiguity of default legal rules and the potentially ruinous scale of consequential damages, commercial parties have overwhelmingly turned to a contractual tool to manage this exposure: the waiver of consequential damages.

This clause is a provision that contractually limits or entirely excludes a party’s liability for indirect, special, incidental, or consequential losses.³

Its primary purpose is to inject certainty and predictability into a commercial relationship by allocating the risk of unforeseen, downstream losses before any dispute arises.⁶

Courts generally respect and enforce these waivers, operating under the principle that sophisticated commercial parties should be free to bargain and allocate risks as they see fit.

As long as the waiver’s language is “clear and unambiguous” and the provision is not unconscionable (i.e., grossly unfair), judges are not in the habit of rewriting contracts for the parties.⁸

The effectiveness of a waiver, however, hinges entirely on its drafting.

A poorly constructed clause can provide a false sense of security, only to crumble under judicial scrutiny.

The anatomy of an effective waiver includes several key characteristics:

• Specificity over Boilerplate: This is the most critical element. Because the term “consequential damages” is itself ambiguous, simply stating that they are waived is a dangerous strategy.³ A robust clause will go further, providing a specific, though often non-exhaustive, list of the types of damages being waived. For example, a clause might explicitly waive claims for “loss of profits or revenue, loss of opportunity or use, loss of business reputation, or loss of financing”.³ This bespoke drafting, tailored to the specific context of the deal, is essential to avoiding costly litigation over the clause’s scope.⁴
• Mutuality: While not strictly required for enforceability, a mutual waiver—one that applies equally to both parties—is often seen as fairer and can be easier to negotiate. Mutuality protects a contractor, for instance, from a one-sided clause where it is liable for an owner’s lost profits while having waived its own claims for damages like unrecoverable home office overhead caused by owner delays.⁵
• Clarity and Conspicuousness: The language used must be simple, direct, and understandable to a businessperson, not just a lawyer. The clause should also be placed prominently within the contract to support the argument that both parties were aware of and consented to its terms.⁸

The following table provides a practical checklist for drafting or reviewing a waiver of consequential damages.

Principle	DO	DON’T	Rationale
Specificity	Define “consequential damages” with a specific, non-exhaustive list of waived losses (e.g., lost profits, loss of use, reputational harm).3	Rely on the single, undefined phrase “consequential damages” or a boilerplate string of legalisms.3	The term itself is ambiguous and its meaning is often open to debate, leading to costly litigation to determine the parties’ intent.3
Clarity	Use clear, unambiguous language that can be understood by a commercial party. State the waiver’s intent plainly.8	Use convoluted legal jargon or create internal contradictions within the clause.	Courts enforce the parties’ intent as expressed in the contract. Ambiguity will be interpreted by a judge, defeating the purpose of the waiver.22
Scope	Explicitly state whether the waiver applies to claims arising from tort (e.g., negligence) as well as contract breach.	Assume a standard waiver covers all types of claims.	Without explicit language, a waiver might be interpreted to apply only to breach of contract claims, leaving a party exposed to tort liability.
Fairness	Strive for a mutual waiver that applies to both parties, and ensure the waiver does not leave a party with no meaningful remedy.5	Draft a one-sided waiver or couple the waiver with other clauses that eliminate all remedies for a breach.	Courts may find a grossly unfair or unconscionable waiver unenforceable, especially if it leaves the non-breaching party with no recourse.
Integration	Review the waiver in the context of the entire contract, especially indemnity and liquidated damages clauses, to ensure consistency.3	Treat the waiver as a standalone clause without considering its interaction with other provisions.	Conflicting clauses can create a “backdoor” to recovering the very damages the waiver was intended to block, rendering it ineffective.3

Section 6: Backdoors and Pitfalls: When Waivers Fail

The presence of a waiver clause can create a dangerous sense of security.

A contract is a holistic document, not a mere collection of independent clauses.

The interaction between the waiver and other provisions can create a complex, interconnected system of risk, and a failure to analyze these interdependencies is a primary source of litigation.

Several common “backdoors” can undermine or completely negate the intended protection of a waiver.

• Conflicting Indemnity Clauses: This is a major pitfall. A contract’s indemnity provision typically requires one party to protect, or “indemnify,” the other against losses arising from certain events. If this clause is drafted broadly to cover losses “arising out of or in any way related to” a breach of the contract itself—and not just third-party claims—it can create a direct conflict with the consequential damages waiver. A court may find that the promise to indemnify for “all losses” includes consequential damages, creating a “backdoor” route to recovery that bypasses the waiver.³
• Liquidated Damages Carve-Outs: In many negotiations, particularly in construction, an owner will agree to a mutual waiver of consequential damages only if there is an exception, or “carve-out,” for liquidated damages.²² Liquidated damages are a pre-agreed sum of money to be paid for a specific breach, most commonly for project delays.¹⁰ While this is a valid and common risk allocation tool, it explicitly re-introduces a form of damages that is intended to compensate for losses—such as lost revenue or rent—that are functionally very similar to consequential damages.⁵
• The “Failure of its Essential Purpose” Doctrine: This risk is most acute in contracts for the sale of goods and software licenses under the UCC. Vendors often try to get “belt and suspenders” protection by coupling an exclusive remedy provision with a waiver of consequential damages.²³ The exclusive remedy (the “belt”) typically limits the buyer’s recourse to the “repair or replacement” of the defective product. The waiver (the “suspenders”) then excludes liability for all consequential damages like lost profits. The doctrine of “failure of its essential purpose” states that if the seller is unable or unwilling to actually repair or replace the product, the limited remedy has failed. In this situation, some courts will invalidate the
  entire liability limitation scheme, including the consequential damages waiver. The reasoning is that the two clauses are an interdependent package of risk allocation; if the seller doesn’t uphold its end of the limited bargain (the repair), it cannot receive the benefit of the other part (the waiver).²³

Part IV: Industry-Specific Applications and Considerations

Section 7: The Construction Industry: The Legacy of Perini

The construction industry provides a powerful case study in how a single legal decision can fundamentally alter the contractual DNA of an entire sector.

The watershed moment was the 1992 New Jersey Supreme Court decision in Perini Corp. v.

Greate Bay Hotel & Casino.

In that case, Perini was the general contractor for a $24 million renovation of the Sands casino in Atlantic City, for which it was to be paid a fee of approximately $600,000.

A key part of the project was a “new glitzy glass façade” whose sole purpose was to attract customers from the boardwalk during the lucrative summer season.⁵

Perini understood the critical importance of the summer completion date but finished the façade four months late.

The Sands claimed massive lost profits due to the delay.

An arbitration panel, later affirmed by the courts, awarded the Sands $14.5 million in consequential damages for lost profits.¹⁷

The court found these damages were “reasonably foreseeable” because Perini was well aware of the project’s purpose, the importance of the timeline, and the high-stakes nature of the Atlantic City casino industry.¹⁷

The Perini decision sent “shockwaves through the construction industry”.¹⁷

It starkly demonstrated the potential for contractors to face ruinous liability completely disproportionate to their fees or the value of their work.

The industry’s response was swift and decisive.

The American Institute of Architects (AIA), whose documents form the basis for many construction contracts in the U.S., responded by introducing a mutual waiver of consequential damages into its flagship A201 General Conditions of the Contract for Construction, beginning with the 1997 version.¹⁷

This waiver has since become a standard, almost ubiquitous clause in construction agreements.⁵

To avoid the ambiguity that plagued earlier disputes, the AIA clause specifically lists the types of damages waived by each party.

The owner typically waives claims for loss of use, lost rent, loss of income, profit, financing, business, and reputation.

The contractor, in turn, waives claims for its own consequential damages, such as principal office overhead expenses, losses of financing, business, and reputation, and lost profit on other projects it could have taken on.¹⁷

This industry-wide adoption of a standardized waiver represents a massive, market-driven course correction in risk allocation, demonstrating how a collective can contractually opt-out of a common law default that it deems commercially unreasonable.

Section 8: Software and Technology Agreements

In the software and technology sectors, waivers of consequential damages are not just common; they are a fundamental component of the prevailing business model.⁷

A software failure or a data breach can cause catastrophic consequential losses for the customer, including massive business interruption, lost sales opportunities, customer attrition, and severe reputational harm.⁶

The potential liability for a vendor is virtually limitless and bears no relation to the price of the software license.

To manage this existential risk, vendors almost universally employ the “belt and suspenders” approach to liability limitation.²³

The contract will typically include:

1. An Exclusive Remedy (The Belt): This clause states that the vendor’s sole and exclusive obligation in the event of a defect is to use commercially reasonable efforts to “repair or replace” the software.
2. A Waiver of Consequential Damages (The Suspenders): This clause explicitly disclaims all liability for any indirect, special, or consequential damages, including the most significant risk: lost profits.⁷

A typical software contract waiver might read: “In no event shall either Party be liable for any consequential, incidental, special, or punitive damages, including but not limited to loss of profits, loss of business opportunities, or damage to reputation, arising from a breach of this Agreement”.⁷

This contractual structure is what allows vendors to price their products based on development costs and intellectual property value, rather than on the potentially infinite and unpredictable value of the customer’s business that runs on the software.

However, as noted previously, this model has a key vulnerability: the “failure of its essential purpose” doctrine.

This legal principle acts as a judicial check, effectively creating a direct link between a vendor’s operational support capabilities and its legal and financial risk exposure.

A vendor cannot have the benefit of a tightly limited liability model if it fails to uphold its end of the limited bargain—that is, to actually fix the product when it breaks.²³

Section 9: Guidance for Small Businesses and Freelancers

The negotiation of liability clauses takes on a different character for small businesses and freelancers, who often face a significant power imbalance when contracting with larger clients.²¹

For these smaller entities, the contract is not just a legal document; it is their primary operational and financial risk management system.

Unlike a large corporation with dedicated legal teams, insurance policies, and deep pockets, a freelancer’s contract

is their insurance.

A single unfavorable liability clause can pose an existential threat.

The most common and costly mistakes made by small businesses and freelancers often stem from a failure to appreciate this reality.

These errors include working without any signed contract, accepting vague scopes of work that lead to uncompensated “scope creep,” and failing to include clear payment terms, late fees, or cancellation fees.²⁶

Most dangerously, many overlook or fail to understand the implications of liability, indemnity, and intellectual property clauses presented by their clients.²⁶

To counter this, freelancers and small businesses must prioritize several protective clauses:

• Limitation of Liability: This is arguably the most critical protective clause. A freelancer should always seek to cap their total liability under the contract. The most common and fair approach is to limit liability to the total amount of fees paid by the client under that specific agreement. An example clause would state: “Freelancer’s total liability under this contract for any claim shall be limited to the total amount of fees paid by the Client to the Freelancer for the services rendered under this contract”.²⁶
• Indemnification: The goal is to create a balanced indemnity provision. A freelancer should agree to indemnify the client against claims arising directly from their own negligence or infringement of a third party’s intellectual property. In turn, the freelancer should insist that the client indemnify them from any and all claims arising from the client’s use of the delivered work.²⁶
• Clear Scope and Revisions: To prevent endless, unpaid work, the contract must precisely define the project deliverables and specify the number of revision rounds included in the price. Any additional work should trigger additional fees.²⁶

When negotiating these terms, small business owners should not be deterred by common tactics like a client stating, “this is our standard agreement” or “we never change this clause”.²¹

While removing a limitation of liability clause entirely may be difficult, making it fairer is often achievable.

The goal should be to negotiate a mutual waiver or, at a minimum, to cap the freelancer’s liability at the fees paid.

Preparation is key: know your priorities, understand your walkaway point, and frame proposals positively as a way to ensure a clear and fair relationship for both parties.²⁵

Finally, to avoid accidentally entering into a binding agreement during negotiations, all preliminary correspondence should be marked “Subject to Contract”.³¹

Part V: Concluding Recommendations

Section 10: A Proactive Approach to Contractual Risk

The landscape of contract damages is complex, evolving, and fraught with financial peril.

The analysis throughout this report distills into a set of core strategic principles for any commercial party seeking to manage risk effectively.

The key takeaways are clear.

First, the distinction between direct and consequential damages is inherently ambiguous and context-dependent.

Relying on default legal definitions is a recipe for expensive and unpredictable litigation.

Second, lost profits represent a primary battleground, and their classification as either direct or consequential hinges entirely on the nature and purpose of the underlying contract.

Third, while waivers of consequential damages are a powerful and necessary shield, they are imperfect.

Their effectiveness depends entirely on precise, bespoke drafting and a holistic review of the entire contract to eliminate “backdoors” and internal contradictions.

This leads to the single most important recommendation for any commercial actor: Define Your Reality.

Parties must not leave their fate to the mercy of a court’s interpretation of a blurry legal standard.

They must proactively and precisely define critical terms like “consequential damages” and explicitly list the specific categories of loss being waived within the four corners of their agreement.³

To implement this proactive approach, parties should adopt a risk-assessment framework before signing any significant contract.

This involves asking a series of critical questions:

1. What is the realistic worst-case scenario? What are the potential financial consequences if we breach this contract? What are they if the other party breaches?
2. How does the contract allocate these risks? Does the contract’s liability scheme—including waivers, liability caps, and indemnity clauses—clearly and fairly address these worst-case scenarios?
3. Is the risk allocation proportionate? Is the proposed liability cap or waiver reasonable in relation to the contract’s value, the fees being paid, and the potential risks being undertaken by each party?.²
4. Are there internal conflicts? Does a broad indemnity clause threaten to undermine the consequential damages waiver? Does a liquidated damages clause re-introduce the very risks the waiver was meant to eliminate?.³

In an increasingly interconnected global economy, the “ripple effects” of a single contractual failure can be more extensive and damaging than ever before.

While the legal doctrines governing damages will continue to evolve through case law, the timeless commercial principle of managing risk through clear, thoughtful, and meticulously negotiated agreements will only grow in importance.

The ultimate goal is not to win a future lawsuit, but to create the predictability necessary to conduct business with confidence.⁷

Works cited

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