Modern New Business Rule and How it Has Been Applied by the Courts Earlier this year, the author published two articles that appeared in QuickRead discussing calculating lost profits and defense responses for lost profits calculations in cases falling under the modern new business rule. The foundation for the article on defense strategies was an article published by Victor Goldberg. Following publication, the author was contacted by Mr. Goldberg, who recommended additional reading on this topic. That has led to this article. Under the new business rule, a new or unestablished business could not recover lost profits. This rule was…
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While the vast majority of jurisdictions have moved away from the new business rule and adopted the modern new business rule, by which new/unestablished businesses can recover damages, such adoption does not diminish the requirements under the reasonable certainty standard. Given the lack of historical financial performance data and under the lens of the reasonable certainty standard, estimates of lost profits damages to new/unestablished businesses are subject to a higher level of scrutiny. This article focuses on new/unestablished businesses and the importance of post-incident business-specific data/facts to isolate the effects of the disputed event, and to establish a measure of…