Court Enforces Contract Clause Limiting Damages

On November 29, 2018, Justice Scarpulla of the New York County Commercial Division issued a decision in Lam Platt St. Hotel LLC v. Golden Pearl Constr. LLC, 2018 NY Slip Op. 33018(U), enforcing a contract provision limiting damages, explaining:

The Contract contains a mutual waiver provision, in Rider 8.0A, which clearly limits the damages Lam Platt may seek for breach. Specifically, that provision prohibits recovery of consequential damages arising out of or related to the Contract, except for gross negligence or willful misconduct, which Lam Platt has not alleged. Moreover, the parties explicitly waived recovery of damages for profit. Similarly, Lam Platt's claim for financing damages has also been waived. This clear agreement between the parties on the allocation of the risk of loss in the event of a breach must be honored. Accordingly, the first cause of action for breach of contract is dismissed to the extent that it asserts damages for lost profits and consequential damages.

(Internal quotations and citation omitted).

A key element in commercial litigation is calculating damages. Contract clauses limiting damages are common and how they are enforced can make a big difference in whether, and if so, how, you litigate an action. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding a contractual damages limitation clause.