Describe what "consequential damages" are.

Consequential damages refer to the losses that occur as a secondary result of a primary incident or loss. These damages are not directly caused by the initial event but arise as a consequence of the primary damage. For example, if a factory is damaged and cannot produce goods, the loss of profit during the downtime would be considered consequential damages. This indicates that while the initial damage is pivotal, the resulting impact on earnings or operations showcases the broader scope of financial consequences that the affected party must endure.

Direct damages, on the other hand, relate solely to the immediate impact of the loss, such as the cost to repair or replace damaged property. Costs related to repairing property are also focused directly on the primary incident without considering the broader implications of resulting losses. Additionally, while negligence can lead to damages, the scope of consequential damages is more specifically tied to the indirect outcomes resulting from the initial loss rather than negligence itself. Thus, the essence of consequential damages captures the idea of indirect financial impact flowing from an initial damaging event.