The New Jersey Supreme Court has recently granted certification in Larry Schwartz v. Nicholas Menas, Esq. (No. A-54/55-20) (085184), in which the court will consider whether finally to abandon the “new business rule,” which categorically bars damages for the prospective profits of a new business in most civil contract and tort actions.

Once a staple of remedies law, this rule of per se exclusion of lost profits for new businesses from a damages award has now been abandoned by most other jurisdictions, in favor of an evidence-based inquiry into whether the plaintiff had proved damages “with reasonable certainty.” While it might be more difficult for a plaintiff to establish such reasonable certainty with regard to a business with no historical track record of profits, the modern, and we believe better, rule is to allow the plaintiff a fair chance to persuade the factfinder with relevant evidence, especially given the greater reliability and sophistication of expert economic projections.

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