When a party in a binding contract suffers economic loss is that party limited to recovery from a claim for breach of contract or can economic or consequential damages be recovered? That was a question put before the United States District Court for the Eastern District of New York.
In the case, the plaintiff provided information technology services while the defendant provided systems for storing and protecting client data. The parties entered into two separate agreements under which the plaintiff was to consider the defendant’s software products and also borrow its hardware during an evaluation period. After the evaluation period the plaintiff was to either license the evaluated programs and purchase the hardware or return both to the defendant. The parties elected to go forward with the upgrade. Each of the agreements between the plaintiff and defendant contained a broad limitation of liability provision that effectively provided that the defendant would have no liability for consequential, exemplary, special, indirect, incidental or punitive damages or any other loss or expense (including loss profits) even if it had been advised of the possibility of such damage, loss or expense.