A breach of contract occurs when a person does not hold up their end of the bargain. In most cases, a breech of contract will cause one party to lose money. Depending on the circumstances, this money can often be recovered through the legal system.
If you have lost money because someone breached a contract, you may consider bringing suit in court. Before doing so, you should consult with a contract lawyer to determine what you can recover.
Depending on the particular circumstances of a case, you might be able to recover what would have been future profits had the breach not occurred. This is usually referred to as "future lost profits." Future lost profits are sometimes difficult to ascertain.
To recover future lost profits, you must demonstrate (with reasonable certainty) that future lost profits have been caused by the breach.
Courts typically use the following guidelines to establish whether or not the loss can be proven with reasonable certainty:
- The amount lost may not be speculative or imaginary.
- The loss must be directly traceable to the breach.
- The loss cannot be remote.
- The loss cannot be the result of other unrelated causes.
- You must also show that when the contract was entered into, both parties reasonable knew that such a loss would occur if there was a breach of contract.
If you have a new business, the courts impose an even stricter standard as it is more difficult to figure out with certainty any losses that occurred due to the breach of contract. This is because a new business does not have enough records to make that determination.
The law doesn’t require that the estimate of future lost profits be mathematically precise, only that the amount lost be capable of measurement based upon known reliable factors. The courts are simply looking to prevent people from recovering if they only have speculation to prove what was lost.
If you have been involved in a breach of contract case, and the amount you have lost could include the loss of future profits, you may find the advice of a business attorney to be extremely helpful.
Due to the complex nature of contract law, the advice of a business attorney that specializes in contract breach may prove beneficial when assessing the strengths and weaknesses of your case.