GlossaryEN1 min readUpdated: Jun 26, 2026

Liability for Consequential Loss

Limiting or excluding consequential loss is one of the most keenly negotiated points in logistics and freight contracts – because indirect losses can dwarf the original physical damage.

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Last updated: 26 June 2026Published: 27 January 2026

Source: https://www.irmi.com/term/insurance-definition/consequential-loss

Category

Logistics Concept

Reading time

1 min

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142

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Definition & Explanation

Limiting or excluding consequential loss is one of the most keenly negotiated points in logistics and freight contracts – because indirect losses can dwarf the original physical damage. Liability for consequential loss refers to a carrier's, forwarder's, or service provider's legal exposure for losses that are not the direct result of the harmful event but flow from it as downstream consequences: a production shutdown caused by a delayed shipment, lost sales from a failed customer call-off, or emergency sourcing costs following cargo damage. Standard freight contracts and general trading conditions routinely exclude such claims, since the potential exposure is difficult to quantify and could be open-ended. Where consequential losses are not entirely excluded, contracts typically impose causation requirements, foreseeability thresholds, and financial caps. This form of liability should not be confused with liquidated damages, where the compensation amount is fixed in advance.