Greater Kansas City ASA (KCASA) Supports Mutual Waiver of Consequential Damages Legislation

Greater Kansas City ASA (KCASA) supports SB 335, which requires construction contracts to include a mutual waiver of consequential damages by amending K.S.A. 16-1901 and 16-1907 and repealing existing provisions. This legislation appropriately recognizes the importance of mutual consequential-damages waivers in construction contracts.

Consequential damages are indirect damages that do not flow directly from a breach but result from it. For example, an owner may seek lost profits or increased financing costs if a contractor fails to complete work on time. Conversely, a contractor may seek increased operating costs or lost business opportunities if an owner interferes with performance. Failure to address consequential damages creates uncertainty and disproportionate risk for both parties. As a result, mutual waivers of consequential damages have become standard practice in the construction industry and are included in widely used contract forms published by the American Institute of Architects and ConsensusDocs.  When consequential damages are not waived or limited, contractors must account for increased risk by adding contingencies to their bids, resulting in higher project costs. On public projects, these increased costs are ultimately borne by taxpayers. Mutual waivers of consequential damages promote clarity, fairness, and balanced risk allocation.  KCASA will keep us updated on how this important legislation advances within the Senate and beyond.