Lost Profits and Reasonable Certainty
Business and Commercial Disputes By Harvey Binnall PLLC - 2019/03/22 at 10:19am
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If you are involved in a breach of contract dispute in which the breaching party has caused you to sustain significant profit loss, then you may be entitled to such damages. Lost profits damages are likely to be in excess of the standard damages total that would otherwise be available, as they account for prospective economic harm (which carries with it an element of inherent uncertainty).
Lost profits damages can be difficult to establish, however, and courts tend to be rather conservative in allowing for the recovery of anticipated profits. As such, success will largely depend on your ability to present a comprehensive evidentiary record that clearly supports your damage assertions.
Here at Harvey & Binnall, PLLC, we can help you navigate the unique challenges and opportunities associated with a dispute involving lost profits damages. Contact us for guidance on how to proceed.
Availability of Lost Profits in a Breach of Contract Dispute
Lost profits are necessary — in many breach of contract disputes — to ensure a full and adequate recovery, and in fact may constitute the bulk of the loss at-issue.
For example, suppose that you are engaged in a contract with a manufacturer to construct specialty hinges for your luxury furniture line, which you have already sold to retail stores (and are simply looking to fulfill the order). The manufacturer breaches their contract at the last minute, however, leaving you in a lurch — without their specialty hinges, you cannot fulfill your order in time, and you will lose the contracts with the retail stores. Though you may have sustained a variety of small losses (material expenses, costs of sales processes in engaging with retail stores), the bulk of your losses are encapsulated by the anticipated future profit of the sale.
Lost profits are fundamentally inexact compared to other forms of “present” damages. In breach of contract litigation, lost profits are recoverable so long as you can establish the amount (and support the claim itself) with reasonable certainty. Though a lesser degree of certainty is required than with standard damages, and though it is more speculative, you will still have to prove your entitlement to lost profits damages on the basis of objective facts and data.
This is a highly fact-based determination and varies from case-to-case.
In our previous example, the retail store contracts likely contained a specific order amount which provides an exact and objective measure of lost profits. Not every case is quite so straightforward, however. In some cases, the lost profits may be based on sales projections about how much you could have sold over a period of time to consumers — whether your projections meet the “reasonably certain” standard depend on the consistency and predictive power of your prior sales data.
Contact an Experienced Lawyer at Harvey & Binnall, PLLC for Comprehensive Guidance
Here at Harvey & Binnall, PLLC, our attorneys have decades of experience representing plaintiffs and defendants in breach of contract disputes, including those that center around a disagreement over the availability of lost profits damages. We are committed to relentless and thorough advocacy — this aggressive approach to litigation allows us to maximize the potential damages.
Call 703-888-1943 or send us a message online to speak to a skilled Alexandria commercial litigation lawyer at Harvey & Binnall, PLLC today.