Question about the Contract

CLIENT waives any claim for consequential, exemplary, special or incidental damages or for the loss of the use of the home/building even if the CLIENT has been advised of the possibility of such damages. The parties acknowledge that the liquidated damages are not intended as a penalty but are intended
(i) to reflect the fact that actual damages may be difficult and impractical to ascertain;
(ii) to allocate risk among the INSPECTOR and CLIENT; and
(iii) to enable the INSPECTOR to perform the inspection at the stated fee.

What is meant by this paragraph?

What is meant by “consequential damages,” “exemplary damages,” “special damages,” “incidental damages,” and “liquidated damages.”
Why are these liquidated damages difficult and impractical to ascertain?
Why are these liquidated damages allocated among the inspector and client?

It’s pretty much plain English. In return for the inspector being willing to perform the inspection for only $300 or whatever, the client pre-agrees to take some of the risk and not to ever demand consequential damages, especially since such damages are difficult to quantify.

“Special” damages are actual, provable damages resulting directly from the alleged negligence or breach of contract.

“Incidential” damages are sometimes awarded in a lawsuit for a breach of contract as compensation for commercially reasonable expenses incurred as a result of the other party’s breach, such as costs of inspecting and returning goods that do not conform to contract specifications.

Parties to a contact may agree to “liquidated” damages when actual damages will be difficult or hard to prove. To agree on liquidated damages in a contract is to agree on damages in advance so that the aggreived party does not have to prove actual damages at trial. The typical InterNACHI contract provides that the parties agree to liquidated damages are limited to the amount paid to the inspector as a fee.

“Consequential” damages are damages that are not the direct result of the inspector’s negligence or breach of contract. For example, let’s suppose a client who is a stockbroker and keeps a home office claims an inspector negligently missed a leaky pipe. Water drips from the pipe and destroys the homeowner’s business files, and some of the homeowner’s clients decide to fire him. If consequential damages are not allowed, the homeowner cannot seek to recover the loss of revenue from departing clients as part of his damages.

“Exemplary” damages are the same as punitive damages, damages to punish the wrongdoer. These are generally not available unless the plaintiff can prove that the inspector is guilty of intentional or reckless misconduct.

Thanks Mark!

Thanks Mark. That’s helpful.
Nick: Just because something is written in English doesn’t make it plain English. Every occupation has its jargon and this is legal jargon. That is not a bad thing as long as I can ask about its meaning without being made to feel like a fool.

You misunderstood. “Plain English” is itself a legal phrase. It means with minimal legal jargon. That is what I meant by it. All our documents are pretty much plain English documents. See

Thanks Nick. My apology.

My fault. Lack of inflection on the mb gets us all in trouble at one time or another. We’re furiously working toward launching the first video conferencing message board.

Nice, but then half of us would have to put something on while we’re here!!:mrgreen:

A video message board with thousands of members? Hehe, yeah.