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Recovering Lost Profits in a Contract Dispute

Business and Commercial Disputes By Binnall Law Group - 2021/04/02 at 07:07pm

Hire a Skilled Alexandria Business Litigation Attorney

If you’re involved in a contract dispute, then you may be wondering whether you are entitled to recover compensation in the form of “lost profits” damages.  Lost profit damages can provide for a significant recovery, enabling the harmed individual to secure compensation that accounts for losses that were not yet sustained. Our Alexandria business litigation attorney knows these are critical in some cases.

For example, suppose that you enter into an agreement to purchase a shipment of handmade toys from a supplier.  There is no adequate alternative on the market.  The supplier reneges on the agreement and you are left without the shipment.  As you cannot sell those toys, you could ostensibly sue and recover for the lost profits that you would have otherwise made had the toys been shipped.

Let’s take a closer look at how lost profits work.

When Are Lost Profits Available?

Lost profits are speculative by nature.  Simply put, you are attempting to calculate what “would have been” had the contract not been breached by the defendant — but in truth, you do not have the data to show the actual losses.

As such, you will have to introduce evidence that allows you to reasonably estimate your lost profits.  To successfully recover lost profits, courts require that the claim not be overly speculative.

What does this mean, exactly?

The breach of contract must be connected to the lost profits, and that connection must be reasonable.  You can establish a reasonable connection by introducing evidence of past profits for your business.  The future lost profits must be estimable with reasonable certainty.  This is a highly fact-based evaluation.

For example, suppose that you enter a contract with a maintenance crew to fix up a portion of your retail store property.  The maintenance crew fails to do their job properly — they cause a pipe leak, forcing you to shut down your business for a full week while corrective repairs are done.  The “lost profits” for that 7-day shutdown should be reasonably estimable given past profits data.

Contact an Alexandria Business Litigation Attorney for Immediate Assistance

Harvey & Binnall, PLLC is a boutique commercial litigation firm based out of Alexandria, VA and representing clients throughout the DC metro region.

We are relentless advocates with extensive experience assisting clients in a wide range of business disputes.  Our team is committed to helping our clients navigate the dispute effectively and secure the maximum available damages — whether or not those damages include lost profits.

We understand that a contract dispute can be frustrating, challenging, and may (at first glance) seem unresolvable.  To that end, we engage closely with the client so that they are kept apprised of case developments, and to ensure that we have the insight we need to push for a favorable outcome.

If you would like to speak to an experienced Alexandria business litigation attorney at our firm, we encourage you to call us at (703) 888-1943 or send us a message online to request a consultation at your earliest convenience.