Which term covers losses indirectly caused by a wrong, such as a breach of contract or a tort?

• A. Compensatory damages
• B. Consequential damages
• C. Extracontractual damages
• D. Punitive damages

Answer: (B)

Consecutive losses are damages that don’t flow directly from the wrong but come about as a natural result of the conduct. These are the indirect or special damages that arise from the broader impact of a breach or tort, not the immediate cost of fixing the breach itself. They are recoverable if they were foreseeable by the parties at the time of the contract as a probable consequence of the breach.

For example, if a supplier fails to deliver on time and stops a manufacturer's production line, the profits the manufacturer would have earned from fulfilling customer orders can be considered consequential damages, because they represent a foreseeable fallout beyond the direct cost of the late delivery.

The other terms don’t capture this idea as precisely: compensatory damages cover actual losses suffered (often including direct costs and some out-of-pocket expenses), punitive damages aim to punish the wrongdoer, and extracontractual damages is not a standard label for these indirect losses within contract-focused contexts.