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Damages, Consequential Damages, Lost Profits, Foreseeability, Reasonable Certainty, New Business Rule

  • DONG-A LAW REVIEW
  • 2017, (74), pp.87-115
  • Publisher : The Institute for Legal Studies Dong-A University
  • Research Area : Social Science > Law
  • Received : December 31, 2016
  • Accepted : February 22, 2017
  • Published : February 28, 2017

JIN, DO-WANG 1

1인천대학교

Accredited

ABSTRACT

Generally, a party that establishes a breach of contract claim may recover benefit of the bargain damages to put it in the position it would have enjoyed had the contract not been breached. Such damages may include the profits the party would have made had the contract been fully performed. The claimed lost profits may be general damages, consequential damages, or a combination of both. Because damages for lost profits are too speculative to be defined, courts have had a trend toward limiting the power of juries to award damages for lost profits. The trend includes a popular legal rule, foreseeability, derived from Hadley v. Baxendale. However, there is a transformation from the foreseeability to a reasonable certainty rule in determining whether to award damages for lost profits. That is, reasonable certainty as a new rule limiting lost profits has spread in the US damage law. Because the lost profits are relevant to future interests not occurred in @@ the plaintiffs’ claim for lost profits are speculative as a matter of law. In that case, even though the damages are reasonably foreseeable at the outset of the contract, whether or not they would occur is still uncertain. There is a likelihood of that occurrence. Thus, we can assume that damages for lost profits are foreseeable, but they are not likely to occur. For example, while foreseeability to lost profits may be easily recognized in the commercial contract between business entities, it is very difficult to prove lost profits damages with reasonable certainty in the future. In this case, the reasonable certainty rule rather than the foreseeability rule plays a leading role in limiting awarding damages for lost profits.

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