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For nearly a century, New Jersey courts have consistently imposed a per se ban on a new business’s claims for lost profits on the ground that such claims cannot be proven with reasonable certainty. In a unanimous opinion issued last week, the New Jersey Supreme Court opened the door to such claims, but with ill-defined limitations. Schwartz v. Menas (August 17, 2022).
New Jersey’s “new business rule” dates back to 1936. Weiss v. Revenue Building & Loan Ass’n, 116 N.J.L. 208 (E&A 1936). The general rule is that lost profits are recoverable if proven with “a reasonable degree of certainty,” but “[a]nticipated profits that are remote, uncertain or speculative . . . are not recoverable.” Prospective profits of a new business were considered too remote and speculative to meet that standard.
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