“In an action for breach of contract, the goal is to place the injured party in the position it would have been in had the other party not breached the contract so as to give the aggrieved party the benefit of its bargain.” Katz Deli of Aventura, Inc. v. Waterways Plaza, LLC, 183 So. 3d 374 (Fla. 3d DCA 2013). “A damage award for breach of contract for the sale of goods is typically covered by section 672.713 of Florida’s version of the Uniform Commercial Code” (“Florida’s UCC”). HGI Associates, Inc. v. Wetmore Printing Co., 427 F.3d 867 (11th Cir. 2005). Under Florida’s UCC, “the measure of damages for nondelivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages . . ., but less expenses saved in consequence of the seller’s breach.” § 672.713, Fla. Stat. Peter Mavrick is a Fort Lauderdale business litigation attorney, and represents clients in business litigation in Miami, Boca Raton, and Palm Beach. The Mavrick Law Firm represents businesses and their owners in breach of contract litigation and related claims of fraud, non-compete agreement litigation, trade secret litigation, trademark infringement litigation, employment litigation, and other legal disputes in federal and state courts and in arbitration.
Consequential damages consist of “[a]ny loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could not reasonably be prevented by cover or otherwise.” § 672.715, Fla. Stat. The Eleventh Circuit in Nyquist v. Randall, 819 F.2d 1014 (11th Cir. 1987), interpreted section 672.715, Florida Statutes, to mean “that (1) ‘consequential damages’ are those damages ‘resulting from general or particular needs’ of the purchaser, (2) such damages are not recoverable unless ‘the seller at the time of contracting had reason to know’ of the possibility that they would occur, and (3) such damages are not recoverable unless they ‘could not reasonably be prevented by cover or otherwise.’” Incidental damages include “any commercially reasonable charges, expenses or commissions . . . resulting from the breach.” § 672.710, Fla. Stat. The purpose of incidental damages is “[t]o authorize reimbursement of the seller for expenses reasonably incurred by him as a result of the buyer’s breach.” Florida Recycling Servs., Inc. v. Peterson Indus., Inc., 858 So. 2d 1114 (Fla. 2d DCA 2003).
Lost profits fall under the category of consequential damages. Nyquist v. Randall, 819 F.2d 1014 (11th Cir. 1987). The general rule in Florida, however, is to avoid lost profit damages because they can be too speculative and conjectural. Levitt-Ansca Towne Park P’ship v. Smith & Co., 873 So. 2d 392 (Fla. 4th DCA 2004). Lost profits can nevertheless be recovered if (1) the breaching party caused the loss; and (2) the amount of such damages can be adequately determined by some standard. W.W. Gay Mech. Contractor, Inc. v. Wharfside Two, Ltd., 545 So. 2d 1348 (Fla. 1989). “Lost profits must be established with some reasonable degree of certainty and must be the natural consequence of the wrong.” Sostchin v. Doll Enterprises, Inc., 847 So. 2d 1123 (Fla. 3d DCA 2003). Thus, to permit recovery of lost profits, the court will consider whether “(1) the seller’s breach naturally caused (2) the buyer to suffer damages arising from the buyer’s general or particular needs that (3) the seller had reason to have known at the time of contracting, and (4) those damages can be proven to a reasonable certainty, but (5) the buyer could not have prevented them by cover or otherwise.” HGI Associates, Inc. v. Wetmore Printing Co., 427 F.3d 867 (11th Cir. 2005) (applying Florida law).
While the amount of lost profits does not have to be proven with mathematical precision, Florida courts have held a “plaintiff may recover the value of his contract, and this may be measured by the value of the expected profits.” Sharick v. Se. Univ. of Health Scis., Inc., 780 So. 2d 136 (Fla. 3d DCA 2000). “The uncertainty and speculative nature of lost profits that generally defeats their recovery in contract cases refers to the cause of the damage and not to the amount of the damage.” HGI Associates, Inc. v. Wetmore Printing Co., 427 F.3d 867 (11th Cir. 2005). For example, in Forest’s Mens Shop v. Schmidt, 536 So. 2d 334 (Fla. 4th DCA 1988), the Fourth DCA denied a shop tenant’s lost profit claim stemming from his landlord’s reputation of a lease for additional shop space. The Fourth DCA held lost profits relating to the shop tenant being unable to expand into the additional space was too speculative and conjectural because the store had not posted a profit in two years, and had actually lost money as sales increased. Thus, the Fourth DCA held it was within the realm of speculation and conjecture that the lease of space would have increased profits and that the repudiation caused the tenant to lose profits.
Peter Mavrick is a Fort Lauderdale business litigation lawyer, and represents clients in Miami, Boca Raton, and Palm Beach. This article does not serve as a substitute for legal advice tailored to a particular situation.