Meaning
Contractual liability exclusions limit seller financial exposure by removing indirect losses from indemnification obligations. A consequential damage carveout specifies that compounding resin suppliers or custom molders face no liability for customer downtime, lost sales, or downstream assembly scrap caused by defective plastic components. The clause governs resin supply contracts and custom molding purchase orders, stopping at the boundary of direct material replacement costs.
Financial Exposure
Risk allocation remains restricted to primary product costs when quality failures occur on automated assembly lines. Inclusion of a consequential damage carveout prevents raw material buyers from claiming consequential factory shutdown costs against compounding vendors when out-of-specification resin causes molding tool damage.
Scrap Recovery
Material reimbursement covers only physical pellet or part unit value. Negotiated terms incorporating a consequential damage carveout restrict compensation to simple credit memos for returned defective lots.
Production Downtime
Assembly line stoppages create operational losses that purchasers cannot pass backward through the polymer supply chain. When molders deliver parts with latent stress cracking, the consequential damage carveout protects the supplier from paying customer labor costs incurred while purging lines or replacing damaged subassemblies. Claim remedies remain strictly capped at the purchase price of the delivered molded components.
