Courts have been reluctant to establish a definition for 'consequential loss'. The term broadly encompasses losses that occur as a consequence of a breach of contract which may be reasonably supposed to be within the contemplation of the parties at the time they made the contract and which do not arise naturally or directly from the breach.
Problems frequently arise with the definition of consequential loss. A common one is whether the use of the terms by the parties to an agreement was intended to exclude particular types of direct or indirect losses, especially loss of profit. Loss of profit is usually regarded as 'direct' loss and an exclusion in respect of consequential losses may only cover loss of indirect profits rather than direct profits.