When making a legal claim for lost profits, the damage indicated must be proven.
Lost profits is a type of material damage that results in the interruption of obtaining profits as a result of a harmful episode. An injury caused by third parties, an illegal action or the breach of a contract can generate loss of profits , that is, the impediment to receiving, in a timely manner, benefits or legitimate economic income.
Within the field of material damage, there exists a concept closely linked, and similar to that of loss of profits , which is known as consequential damage . This is what it is called when financial amounts, powers or assets that already existed are decreased or lost and, therefore, the victim suffers damage that affects their assets . In both situations, it is possible to claim compensation .
The theory indicates that, in the event of consequential damage , compensation is provided that is not punitive in nature but rather compensatory in nature. Of course, both in the case of loss of profits and consequential damage , it is essential that one or the other situation be duly proven and accredited before the Court. The same if the claim is mobilized as a result of moral damage derived from truncated expectations, psychological suffering or emotional imbalance due to someone who did not fulfill a contract or caused inconvenience to the victim due to an illicit act .
Types of lost profits
There are several types of lost profits . It is possible to distinguish, for example, between direct loss of profits and indirect loss of profits (when the existence of indirect victims is proven, such as relatives who were financially dependent on someone who died as a result of damage).
A distinction is also made between current lost profits (due to damages prior to the judicial case) and future lost profits (covering projected damages beyond the extent of the litigation ).
The type of damages or their duration or scope, on the other hand, gives rise to categories such as loss of earnings due to temporary injuries , loss of earnings due to total or absolute disability , and loss of earnings in cases of death .
Unfulfilled contracts or actions of third parties can interrupt the realization of profits.
Insurance coverage
There are insurance coverages and modalities that contemplate loss of profits .
Loss of profits insurance , specifically, protects against damages for which the insurer assumes the responsibility of compensating the insured against the detriment of the economic performance that the latter could have achieved if the incident specified when making the contract did not occur.
It is very important to always keep in mind that both companies and independent workers who earn their living by actively developing a profession are obliged to assume civil liability . In this context, they have civil liability insurance available precisely to cover a possible payment of compensation if they cause damage to a third party as a result of their activity. Having a policy of this type provides the peace of mind of knowing that there is support in case you have to make a repair for any material, physical or economic damage.
When managing commercial insurance, to detail another possibility, the clauses must be carefully analyzed because there are policies that exclude from coverage any issue associated with loss of profits, thereby avoiding the need to compensate or respond to loss of clientele, business interruption, etc.
And if we direct our attention to the characteristics of compensation insurance , then we can appreciate an interesting range of options that range from compensation insurance for worker disability or death to compensation insurance for serious illnesses or indemnity insurance. due to work accidents .
Lost profits, if proven in court, are compensated.
Claim for lost profits
A claim for lost profits is viable if it can be shown that the injured party has had certain profits frustrated as a result of damage. It is difficult and complex to prove how much the loss of profit amounts to.
The jurisprudence , however, indicates that it is possible to obtain compensation if the affected person, through a professional who represents him or her in his or her role as plaintiff , manages to provide the Justice with concrete and reliable evidence (expert reports, technical reports, testimonies, documentation ) about the damage, prove the causal link (the cause and effect) that connects the damage with the profits that have been lost and establish the economic amount of them.
In these types of situations there are experts who are dedicated to investigating and trying to define how the loss of profits could have occurred, taking into consideration that sometimes there is more than one factor compromised or involved. A lawsuit of this nature can be mobilized based on a traffic accident , a breach of contract or a business interruption , among other realities.
It is even necessary to know that in most civil codes, lost profits are included, regulating cases of compensation for damages that arise when contractual obligations are not met, but there are usually no mentions of extracontractual liability, although it does exist. the tendency to apply it there as well, as deduced from reviewing both jurisprudence and doctrine.