A & P BAKERY SUPPLY & EQUIPMENT COMPANY, A FLORIDA CORPORATION, APPELLANT,
v.
SALAMEH K. HAWATMEH, APPELLEE
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A & P Bakery Supply breached a contract to sell a damaged commercial oven to Hawatmeh, who then purchased a comparable used oven for less than one-quarter of the contract price. The appellate court affirmed the jury's finding of breach and contract formation but reversed the damages award because the trial court erroneously allowed the jury to award lost profits despite the business being in its inception stage.
The court affirmed the jury's finding of contract formation and breach but reversed the damages award. Lost profits cannot be awarded when the business was in its inception stage and lacks a prior record of profitability, as such damages would be purely speculative. Damages should instead be calculated under Florida Statutes Section 672.712 as the difference between the cost of cover and the contract price, plus incidental or consequential damages.
[1] A jury's finding that a contract was formed and breached will not be reversed absent a clear error.
[2] Lost profits are generally not recoverable as damages for breach of contract because they are speculative and remote.
Previewing 2 of 6 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“if prospective profits form an elemental constituent of the contract, their loss, the natural result of its breach, and the amount can be established with reasonable certainty, such certainty as satisfied the mind of a prudent and impartial person, they are allowed. The requisite to their allowance is some standard, such as regular market values, or other established data, by reference to which the amount may be satisfactorily ascertained.”
Establishes the stringent requirements for awarding lost profits damages under Florida law—they must be an essential part of the contract and provable with reasonable certainty by reference to objective standards.
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Join FLexlaw to unlock all legal intelligenceA & P Bakery Supply and Hawatmeh negotiated discussions regarding the sale of a damaged commercial oven. The jury found these discussions culminated i…
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HENDRY, Judge.
The parties entered into discussions regarding the sale to appellee of a damaged commercial oven owned by appellant. A jury found that those discussions culminated in a contract, which appellant breached by his sale of the oven to a third party. We are not disposed to reverse the findings of the jury in that regard. However, we reverse that portion of the verdict pertaining to appellee’s damages award, and remand for new trial on that issue.
When appellant sold the defective oven, and thereby breached his contract for sale to appellee, appellee covered his loss shortly thereafter by the purchase of a used oven for less than one quarter of the price which he had negotiated for the purchase of appellant’s equipment. It appears, and it is not disputed, that the oven ultimately purchased by appellee is the functional equivalent of the more expensive model.
Although the trial judge warned the jury that their damages award should not be based upon speculation or conjecture, he allowed, with that caveat, their consideration of the issue of lost profits stemming from appellant’s breach. This was error. The law regarding damages for loss of profits has been clearly fixed: Although
[t]he well-recognized general rule in this state is that anticipated business profits are too remote, speculative and contingent to warrant a judgment for their loss, ....
Touchette v. Bould, 324 So. 2d 707 (Fla. 4th DCA 1975), nevertheless,
[i]n Twyman v. Roell, 123 Fla. 2, 166 So. 215 (1936), the Supreme Court held that “if prospective profits form an elemental constituent of the contract, their loss, the natural result of its breach, and the amount can be established with reasonable certainty, such certainty as satisfied the mind of a prudent and impartial person, they are allowed. The requisite to their allowance is some standard, such as regular market values, or other established data, by reference to which the amount may be satisfactorily ascertained.” [Emphasis supplied]
Welbilt Corp. v. All State Distributing Co., 199 So. 2d 127 (Fla.3d DCA 1967).
Appellee’s business venture was in its inception at the time of appellant’s breach, and therein lies the trial court’s error: Proof of profits for a reasonable time anterior to the breach is required to establish lost profits. New Amsterdam Casualty Co. v. Utility Battery Manufacturing Co., 122 Fla. 718, 166 So. 856 (1936); Innkeepers International, Inc. v. McCoy Motels, Ltd., 324 So. 2d 676 (Fla. 4th DCA 1975), cert. denied 336 So. 2d 106 (Fla. 1976); Conner v. Atlas Aircraft Corp., 310 So. 2d 352 (Fla.3d DCA 1975), cert. denied 322 So. 2d 913 (Fla. 1975); Ashland Oil, Inc. v. Pickard, 269 So. 2d 714 (Fla.3d DCA 1972), cert. denied 285 So. 2d 18 (Fla. 1973). Where a record of past profitability is unavailable to inform a jury’s deliberations, any finding it might make regarding lost profits must be purely speculative. Since appellee cannot establish past profits, he cannot claim lost profits resulting from appellant’s breach.
On remand, damages should be determined in accordance with Section 672.-712, Florida Statutes (1979):
(2) The buyer may recover from the seller as damages the difference between the cost of cover and the contract price together with any incidental or consequential damages . . . but less expenses saved in consequence of the seller’s breach.
The trial court should ensure that the issue of lost profits is not submitted to the jury.
Reversed and remanded.
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Forest's Mens Shop and Ladies Den of Stuart v. Schmidt, 536 So. 2d 334 (Fla. 4th DCA 1988)…for a reasonable time before the occurrence of the wrong complained of. E.F.K. Collins Corp. v. S.M.M.G., Inc., 464 So. 2d 214 (Fla. 3d DCA 1985); Murciano v. Urroz, 455 So. 2d 463 (Fla. 3d DCA 1984); A & P Bakery Supply & Equipment Co. v. Hawatmeh, 388 So. 2d 1071 (Fla. 3d DCA 1980). In other words, “[i]n order to recover lost profits, there must be an on-going business with an established sales record and proven ability to realize profits at the established rate.” Daytona Migi of Jacksonville, Inc. v. Dayton…
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Wash-Bowl, Inc. v. Wroton, 432 So. 2d 766 (Fla. 2d DCA 1983)…al, Inc. v. McCoy Motels, Ltd., 324 So. 2d 676 (Fla. 4th DCA 1975), cert. denied, 336 So. 2d 106 (Fla.1976). Proof of profits for a reasonable time prior to a breach is required to establish lost profits. A & P Bakery Supply & Equipment v. Hawatmeh, 388 So. 2d 1071 (Fla. 3d DCA 1980); Welbilt Corp. v. All State Distributing Co., 199 So. 2d 127 (Fla. 3d DCA 1967). There was no track record here to establish a history of profits in the business, since the laundromat was never opened. Further, appellees admitted…
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Halliburton Co. v. E. Cement Corp., 672 So. 2d 844 (Fla. 4th DCA 1996)…nnkeepers Int'l, Inc. v. McCoy Motels Ltd., 324 So. 2d 676 (Fla. 4th DCA 1975), cert. denied, 336 So. 2d 106 (Fla.1976) (recovery for lost profits not generally allowed for new business with no history); A & P Bakery Supply & Equip. Co. v. Hawatmeh, 388 So. 2d 1071 (Fla. 3d DCA 1980) (same); but see Twyman v. Roell, 123 Fla. 2, 166 So. 215 (1936) (proof of lost profits for unestablished business allowable provided there is “yardstick” by which such profits may be measured). More recently, however, in W.W. Gay…
Previewing 3 of 13 citing cases — full citator treatment, depth of discussion, and citing context are member features.
Join FLexlaw to unlock all legal intelligenceAuthorities Cited (11 total)
- Twyman v. Gus Roell, 123 Fla. 2 (Fla. 1936)
- New Amsterdam Cas. Co. & C. E. Yocam v. Util. Battery Mfg. Co., 122 Fla. 718 (Fla. 1935)
- Ashland OIL, Inc. v. Rod Pickard, 269 So. 2d 714 (Fla. 3d DCA 1972)
- Conner v. Atlas Aircraft Corp., 310 So. 2d 352 (Fla. 3d DCA 1975)
- Innkeepers Int'l, Inc. v. McCOY Motels, Ltd., 324 So. 2d 676 (Fla. 4th DCA 1975)
- Ashland OIL, Inc. v. Rod Pickard, 285 So. 2d 18 (Fla. 1973)
- Modern Fiber Glass, Inc. v. Rod Pickard, 285 So. 2d 18 (Fla. 1973)
- Caves v. State, 322 So. 2d 913 (Fla. 1975)
- World Ins. Co. v. Wright, 322 So. 2d 913 (Fla. 1975)
- Welbilt Corp. v. ALL State Distrib. Co., Inc., 199 So. 2d 127 (Fla. 3d DCA 1967)