Consequential damages are damages that are foreseeable results of the breach.

• A. False
• B. Only incidental damages
• C. Punitive damages
• D. True

Answer: (D)

Consecutive or special damages are those losses that flow from the breach because of the particular circumstances of the injured party, and they must be reasonably foreseeable as a likely result of the breach at the time the contract was formed. This foreseeability test comes from Hadley v. Baxendale and means you recover these damages only if they were foreseeable by both parties, or if the breaching party knew about the special circumstances that would cause them. So, the statement that consequential damages are damages that are foreseeable results of the breach is correct. They differ from incidental damages (the costs incurred to deal with the breach) and from punitive damages (not typically recoverable in contract).