Consequence damages in contract law are recoverable only if they were what?

• A. Reasonably foreseeable to the defendant at contract formation
• B. Actually paid by the plaintiff
• C. The direct damages only
• D. The contract specifies them in writing

Answer: (A)

Consequence damages require foreseeability at the time the contract is formed. In breach situations, you recover damages beyond the direct loss only if the breaching party could have reasonably foreseen, when the contract was made, that such losses would likely result from a breach or that special circumstances known to both parties would cause those losses. This is the standard from Hadley v. Baxendale: damages must be a probable result of the breach or the product of special circumstances that the parties anticipated. If the breaching party could foresee the loss, you can recover; if not, you generally cannot. This keeps liability tied to what the parties actually contemplated or could reasonably anticipate. The other statements aren’t correct because actual payment by the plaintiff isn’t a requirement, consequential damages aren’t limited to direct damages, and there’s no need for the contract to spell out such damages in writing for them to be recoverable.