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12 April 2024 / C Haward Soper
Issue: 8066 / Categories: Features , Profession , Contract , Commercial
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Consequential loss: searching for the meaning

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What’s the true meaning of ‘consequential loss’? C Haward Soper consults the case law—and that other authoritative source, ChatGPT…
  • Considers what commercial professionals mean by the term ‘consequential loss’ and provides a summary of relevant case law.
  • Compares these definitions with those given as a result of entering prompts into ChatGPT, showing that AI’s usefulness in this area is limited for now.

All contract professionals will be aware of—and perhaps scared of—consequential loss. It’s a matter of interest to any lawyer engaged in the drafting of indemnities or exclusion clauses, whether in general commercial contracts or in mergers and acquisitions.

To help clarify the meaning of the term, I have consulted the relevant case law—and enlisted the help of an expert, ChatGPT, for advice. According to CBS News, one lawyer used ChatGPT last year to prepare for a court hearing. It went horribly awry, with ChatGPT inventing ‘court cases that didn’t exist’. My experiments in AI also show that its usefulness is limited.

Precise limitation

Why

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Secondments, disciplinary procedures and appeal chaos all feature in a quartet of recent rulings. Writing in NLJ this week, Ian Smith, barrister and emeritus professor of employment law at UEA, examines how established principles are being tested in modern disputes
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The AI revolution is no longer a distant murmur—it’s at the client’s desk. Writing in NLJ this week, Peter Ambrose, CEO of The Partnership and Legalito, warns that the ‘AI chickens’ have ‘come home to roost’, transforming not just legal practice but the lawyer–client relationship itself
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A High Court ruling involving the Longleat estate has exposed the fault line between modern family building and historic trust drafting. Writing in NLJ this week, Charlotte Coyle, director and family law expert at Freeths, examines Cator v Thynn [2026] EWHC 209 (Ch), where trustees sought approval to modernise trusts that retain pre-1970 definitions of ‘child’, ‘grandchild’ and ‘issue’
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