What Proof is Required to Cover Lost Profits?
Kegler Brown Construction Newsletter September 1, 2009
Unless a contract provision provides otherwise, a contractor can normally recover lost profits on unperformed work when the owner breaches the contract. However, a recent case has held that a contractor cannot just rest on its planned profit margin pre-construction to calculate its losses.
In Alliance Excavating, Inc. v. Triangle Real Estate Servs., Inc., 2009-Ohio-2761, the Franklin County Court of Appeals threw out the contractor's jury verdict because there was no evidence of the costs that the contractor would have incurred had it been permitted to continue work. The Court of Appeals emphasized that a contractor must prove the further compensation the contractor would have received under the contract if it had been performed, less the value to the contractor of his being relieved of the obligation of completing performance.
Therefore, contractors who seek to recover damages for breach of contract must be prepared to not only show the balance of contract due, but also a credit for the cost of the unperformed work.