New Jersey Should Review Certified Question of Law Rule

The Supreme Court of New Jersey recently granted certification in Larry Schwartz vs. Nicholas Menas, Esq. (No. A-54/55-20) (085184), in which the court will consider whether to finally abandon the “new business rule”, which categorically prohibits damages for the potential profits of a new business in most civil contracts and tort Actions.

Formerly an essential part of the law of appeals, this rule of in itself the exclusion of lost profits for new businesses from an award of damages has now been dropped by most other jurisdictions, in favor of an evidence-based inquiry to determine whether the plaintiff had proven damages “with reasonable certainty”. Although it may be more difficult for a plaintiff to establish such reasonable certainty with respect to a business with no profit history, the modern rule, and we believe the best, is to give the plaintiff a fair chance to persuade the investigator with relevant evidence, especially given the increased reliability and sophistication of expert economic projections.

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