Lost Profits for Unestablished Businesses

In cases involving business torts, including lawsuits for intentional interference with contract, the measure of damages is generally the lost profits and expenses incurred.

A substantial body of older cases stated that lost profits of an unestablished or new business cannot be recovered. A diminishing number of states still follow what is known as the “new business rule.”

Most recent cases reject the once generally accepted rule that lost profits damages for a new business are not recoverable. The development of the law, including the law in California, has been to find damages for lost profits of an unestablished business recoverable when they can be adequately proved with reasonable certainty.

To prove lost profits in a new business generally requires the use of expert testimony concerning economic and financial data, market surveys and analyses, and business records of similar enterprises, or general business conditions and the degree of success of similar enterprises.

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