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

Heading: The Standard for Entitlement to Lost Profits.

Text: The same standards that have for years governed lost profits awards in South Carolina will apply with equal force to cases where damages are sought for a new business or enterprise. First, profits must have been prevented or lost as a natural consequences of the breach of contract. South Carolina Finance Corp. supra , at 122, 113 S.E. (2d) at 335; Charles v. Texas Co. , 199 S.C. 156, 180, 18 S.E. (2d) 719, 729 (1942) (lost profits are proper elements of damages where they are direct and necessary result of defendant's breach). The second requirement is foreseeability; a breaching party is liable for those damages, including lost profits, which may reasonably be supposed to have been within the contemplation of the parties at the time the contract was made as a probable result of the breach of it. National Tire & Rubber Co. v. Hoover , 128 S.C. 344, 348, 122 S.E. 858, 859 (1924); see also Traywick v. Southern Ry. Co. , 71 S.C. 82, 50 S.E. 549 (1905); Colvin v. McCormick Cotton Oil Co. , 66 S.C. 61, 44 S.E. 380 (1902); Sitton v. MacDonald , 25 S.C. 68, 60 Am. Rep. 484 (1885) (lost profits cases citing the knowledge of special circumstances rule of Hadley v. Baxendale , 9 Ex. 341, 156 Eng. Rep. 154 (1854)). The crucial requirement in lost profits determinations is that they be established with reasonable certainty, for recovery cannot be had for profits that are conjectural or speculative. South Carolina Finance Corp., supra , at 122, 113 S.E. (2d) at 336. The proof must pass the realm of conjecture, speculation, or opinion not founded on facts, and must consist of actual facts from which a reasonably accurate conclusion regarding the cause and the amount of the loss can be logically and rationally drawn. 22 Am. Jur. (2d) Damages § 641 (1988). Numerous proof techniques have been discussed and accepted in different factual scenarios. See, e.g., Upjohn v. Rachelle Laboratories, Inc. , 661 F. (2d) 1105, 1114 (6th Cir.1981) (proof of future lost profits based on marketing forecasts by employees specializing in economic forecasting); Petty v. Weyerhaeuser Co., supra (skating rink's projected revenues compared to those of another arena in a nearby town); see also Restatement (Second) of Contracts § 352, at 146 (1981) (proof of lost profits may be established with reasonable certainty with the aid of expert testimony, economic and financial data, market surveys and analyses, business records of similar enterprises, and the like.); Note, supra , 48 Ohio St. L.J. at 872-3 (means of proving prospective profits include (1) yardstick method of comparison with profit performance of business similar in size, nature, and location; (2) comparison with profit history of plaintiff's successor, where applicable; (3) comparison of similar businesses owned by plaintiff himself, and (4) use of economic and financial data and expert testimony). While the factual contexts in which new business/lost profits cases arise will undoubtedly vary, these methods of proof and the reasonable certainty requirement bear an inherent flexibility facilitating the just assessment of profits lost to a new business due to contractual breach.