ABSTRACT
Contractor is not liable to Owner for consequential and indirect damages; similarly, Owner is not liable to Contractor. The same principle applies to Contractor and a Vendor in respect of Purchase Order. Let us, for example, assume that the Vendor’s improper performance caused some losses to Contractor in respect of consequential and indirect damages, whereupon, the Vendor is not liable to the Contractor for (1) diminution value of assets of the Contractor not supplied by the Vendor resulting from the improper performance of Vendor supplied equipment, (2) Wages to workers of the Contractor when work has been disrupted due to a fault in the equipment supplied by the Vendor, (3) Payment, which the Contractor pays to the third person because of liability resulting from a fault of equipment supplied by the Vendor, (4) Loss of profits that the Contractor incurs resulting from delayed delivery of equipment supplied by the Vendor consequently delaying the Project’s contract deadlines.
For a claim to better qualify, the Contract clause should use the phrase “arising out of” instead of “resulting from” or “in connection with,” as “arising out of” has a wider meaning.
