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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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