Opinion ID: 1349008
Heading Depth: 3
Heading Rank: 2

Heading: A Multi-Jurisdictional Trend.

Text: South Carolina has not been alone in developing its evidentiary view of the new business rule. Numerous authorities and commentators have tracked a similar trend nationwide: Courts are now taking the position that the distinction between established businesses and new ones is a distinction that goes to the weight of the evidence and not a rule that automatically precludes recovery of profits by a new business. D. Dobbs, HANDBOOK ON THE LAW OF REMEDIES, § 3.3, at 155 (1973). See R. Dunn, RECOVERY OF DAMAGES FOR LOST PROFITS, § 4.2 (3d ed. 1987) (trend of modern cases plainly toward replacing old rule of law with rule of evidence  reasonable certainty); Comment, Remedies  Lost Profits as Contract Damages for an unestablished Business: The New Business Rule Becomes Outdated , 56 N.C.L. Rev. 693, 695 (1978) (noting increasing trend either to create exceptions and mitigating sub-doctrines to the new business rule or simply to recognize that its rationale is no longer persuasive); Note, The New Business Rule And The Denial of Lost Profits , 48 Ohio St. L.J. 855, 859 (1987) (clear and growing majority of courts apply new business rule as rule delimiting sufficiency of evidence.) Moreover, application of the rule in this manner has been applauded as fairer than mechanical application of the old rule. See D. Dobbs, supra (as a matter of evidence, new business/established business distinction makes sense; as a matter of setting an inflexible rule, it does not); R. Dunn, supra , at 227 (no worthwhile end achieved by permitting one party to breach his contracts with impunity  giving him an option, as it were  because the other party has not yet commenced operation.). In light of the facts before us, we find particularly persuasive several cases involving lost profits flowing from breaches of contracts to construct and/or lease building for the operation of new business ventures. See, e.g., Chung v. Kaonohi Center Co. , 62 Haw. 594, 618 P. (2d) 283 (1980) (rejecting per se nonrecoverability version of new business rule in favor of reasonable certainty evidentiary standard; lost profits award upheld for breach of contract to lease space for new restaurant), Welch v. U.S. Bancorp Realty and Mortgage , 286 Or. 673, 596 P. (2d) 947 (1979) (breach of contract to advance funds for residential and commercial development on land tract; reasonable certainty standard applied); Fera v. Village Plaza, Inc. , 396 Mich. 639, 242 N.W. (2d) 372 (1976) (breach of lease of shopping center space for new book store; per se rule of nonrecoverability rejected in favor of broad jury discretion in lost profits determinations); Smith Dev. Corp. v. Bilow Enterprises, Inc. , 112 R.I. 203, 308 A. (2d) 477 (1973) (tortious interference with contractual right to erect McDonald's restaurant; reasonable certainty rule applied and per se new business rule rejected); S. Jon Kreedman & Co. v. Meyer Bros. Parking-western Corp. , 58 Cal. App. (3d) 173, 130 Cal. Rptr. 41 (1976) (breach of contract to construct parking garage and lease it to operator; hard and fast new business rule rejected in favor of reasonable certainty test). We believe South Carolina should now unequivocally join those jurisdictions applying the new business rule as a rule of evidentiary sufficiency and not as an automatic preclusion to recovery of lost profits by a new business or enterprise.