Lost Profits Not Recoverable—Too Speculative and Not Contemplated in the Agreement

The First Department determined the agreement between the parties did not contemplate lost profits and, therefore, lost profits could not be awarded as damages for the breach:

Nevertheless, the court properly concluded that [plaintiff] was not entitled to recover lost profits. To the extent [plaintiff] seeks lost profits for a five-year period, such damages are speculative, as its assumption that it would have remained in contract with [defendant] for five years could not be established with reasonable certainty. To the extent it seeks lost profits in the amount of $1 million for 2010 (i.e., $500,000 for two seasons), such lost profits were not within the contemplation of the parties as a probable result of a breach at the time they entered into the agreement and could not be established with reasonable certainty … . The evidence surrounding the negotiation and execution of the contract does not show that the parties expected [defendant] to bear the responsibility for any lost profits sustained by [plaintiff]. Indeed, all the witnesses acknowledged that sales revenue of $500,000 per season was mere expectation, and [defendant’s] principal testified that he would not guarantee minimum sales in his sales agreements, especially with emerging designers, as there were “too many variables involved in procuring success in sales in our very competitive and fickle industry.” Such evidence undermines the conclusion that the parties contemplated that [defendant] would assume liability for [plaintiff’s] loss of anticipated revenue … . Olsenhaus Pure Vegan LLC v Electric Wonderland Inc, 2014 NY Slip Op 02343, 1st Dept 4-3-14