A state appeals court just told every contractor who signs a waiver-of-consequential-damages clause without reading it twice: the words on the page are the deal, full stop.
The Appellate Division, First Department, ruled in Gamma v. Pavarini McGovern that a standard AIA-style waiver of consequential damages means exactly what it says — and courts won't rewrite it later to let a losing party recover lost profits, financing costs, or delay damages dressed up as something else. The case turned on how a general contractor and a construction manager fought over what counted as a "direct" loss versus a "consequential" one once a job went sideways.
Here's why that distinction is worth real money. Direct damages are the cost to fix or finish the work — repair costs, the price of a replacement sub. Consequential damages are everything the delay or defect caused downstream: lost rental income, lost financing, lost profit on other jobs you couldn't staff because your crew was stuck cleaning up this one. Most GC and CM contracts waive consequential damages by both sides as standard boilerplate. The court's message is that the boilerplate is enforced as written — judges aren't going to recharacterize a consequential loss as direct just because one side got hurt badly.
So if you're a sub or a CM reading a contract this week, the clause to actually read is the definitions section, not just the waiver line itself. Some contracts list specific carve-outs — indemnification claims, certain insurance-backed losses, liquidated damages — that survive the waiver even though they'd otherwise look consequential. If your contract doesn't carve those out, you're exposed to a loss you might assume is covered and isn't, and this ruling says you'll lose that argument in court.
Before you sign the next GC or CM agreement, have counsel confirm which damages categories the waiver actually reaches and whether your insurance or bond covers the gap. This is not legal advice — it's a flag to raise with your own attorney before the next contract goes out for signature, not after a dispute lands.