An award of lost profits is only appropriate where they are reasonably calculated with a high degree of certainty.
The evergreen Amusement Corporation, the appellant, operator of a drive-in move theater, was held liable by the court to Harold Milstead, the appellee, a contractor, for the balance due on a written contract for the clearing and grading of the site. The appellant then counter-claimed and sought recovery of lost profits for the period of delay. The court held the amount claimed to have been so lost to be too uncertain and speculative, and refused evidence proffered to support appellant's theory. The appellant makes four contentions: that the damage ruling was error; that it should have been allowed to prove a contemporaneous oral agreement as to time of performance; that the appellee was entitled to no compensation for fill dirt supplied by him to bring the property up to grade; and, finally, that the appellee should not be permitted to recover at all because he did not fully perform.
May a new business can recover for lost profits before it started business?
The Court held that you cannot grant profits since the calculation is too speculative. Restatement, Contracts, Sec. 331, states the law to be that damages are recoverable for profits prevented by breach of contract "only to the extent that the evidence affords a sufficient basis for estimating their amount in money with reasonable certainty", and that where the evidence does not afford a sufficient basis, "damages may be measured by the rental value of the property."