Lost profits damages are frequently sought by clients who have suffered a business interruption due to another’s negligence or contractual breach. However, courts often are reluctant to award such damages finding they are speculative and “icing”—in that they do not make the prospective plaintiff whole, but instead permit a surplus recovery in addition to compensatory or consequential damages. For these reasons, courts have restricted lost profits damages, requiring plaintiffs to demonstrate their loss with “reasonable certainty” and ensuring such losses are not recoverable under other theories or in other ways. This article is intended to guide the practitioner through the pitfalls of lost profits damages and ensure the focus is on recovery, regardless of how it is characterized.
As an initial matter, cases addressing lost profits distinguish between damages resulting from tortious conduct and those arising from a breach of contract. Although in both situations a plaintiff has the burden of proving lost profits with reasonable certainty, the underlying causes of action recommend separate treatment.
Tortious Conduct
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