During business litigation, the biggest challenge is whether the plaintiff’s loss of profits can be proven with reasonable certainty. A judge or jury must be presented with sufficient evidence to base upon their judgment. Therefore, in a business lawsuit, you must prove damages with reasonable certainty.
Whether you bring a lawsuit as a partner or shareholder, or even just a member of a limited liability business, you must first establish that you have provable losses.
In the same way, if you are in the middle of a shareholder or partnership disagreement, and you have been sued, you must analyze the potential damages you may face and create an action plan. You must try and figure out how your counterpart will prove with reasonable certainty the damages they claim.
It is challenging in such a case to prove this kind of liability. If you face a loss of profits dispute, you will need a Connecticut business law attorney to help you protect your rights and recover your damages in full.
Lost Profits and Reasonable Certainty
A business affected by a fire in their offices can easily measure the loss of inventory or property damages and claim compensation due to a third party’s negligence. In such cases, objective proof exists and can be calculated.
But, how can you measure, for example, the loss of opportunities?
Especially for small businesses, proving lost profits can be challenging.
In Connecticut, a plaintiff must provide in court evidence of damages that are beyond personal opinion. Proof of injuries must be substantial and not just speculate. The cause of the alleged lost profits must be established with evidence and demonstrated as a conduit for the business loss that occurred.
Also, the amount of damages has to be objectively proven with “reasonable certainty”. Connecticut law does not permit a plaintiff to claim damages based on speculations or personal beliefs. However, there is a level of proof required to be reached to rise to the level of reasonable certainty, and there are no hard rules to do so. Depending on the case’s facts and the type of damages, the level of proof needed varies.
An example showing the issues with evidence in lost profits claim is the case of System Pros, Inc v Kasica. Two equal shareholders went through a lawsuit procedure for their company’s dissolution and a trial on other wrongful conduct. In the trial, the plaintiff shareholder convinced the court that he lost earning opportunities and lost profits due to the defendant’s improper conduct.
As evidence, he presented in court calculations of salaries he would have earned as a business consultant if he was not locked out of the business. The judge was convinced by the evidence and granted compensation.
Even so, in the revision of the matter in the appeal, the court found that the plaintiff did not have enough supporting evidence that he would have been hired as a business consultant for any particular opportunity. The proof that the plaintiff submitted in court concerning job opportunities was only based on conjecture and personal opinion. The plaintiff did not manage to establish evidence of whether these work opportunities really existed, neither if he was qualified for the positions to be hired.
Factors Validating a Claim for Profit Loss
The plaintiff carries the responsibility to demonstrate the cause and the damages to a reasonable certainty. Accordingly, the jury must determine liabilities reasonably supported by proof.
A business law attorney can assist in demonstrating the necessary proof in court and recover your losses. Connecticut courts may examine the following factors to determine the validity of a claim:
- The general circumstances and the environment in which the business operated
- If similar companies have been successful and to what level
- The plaintiff’s previous experience in the same business
- The plaintiff’s experience in the same company subsequent
- Plaintiff’s experience and third parties’ experience in the same field of business comparisons.
Based on the above, small enterprises or start-ups with little background, business planning, and track records will face serious issues filing a complaint requesting compensation for loss of profits and providing proof. In any case, complaints and their legal defendants have to undertake real due diligence to document and pursue their damages coverage.
Contact a Business Law Attorney
Our lawyers at Aeton Law Partners can help you with legal information and guide you on what needs to be done to acquire all the evidence required for a “reasonable certainty” type of lawsuit. If you face a legal business dispute and need expert advice, contact us today for a free consultation meeting.