Legal Definitions - Speculative damages

Speculative damages refer to financial losses or expenses that a party claims to have suffered, but which are based on highly uncertain future events, pure guesswork, or extremely improbable outcomes. Courts generally do not award these types of damages because they are too remote and cannot be proven with a reasonable degree of certainty. The law requires that damages be reasonably foreseeable and demonstrable, not merely hypothetical possibilities.

Here are some examples to illustrate the concept of speculative damages:

• Example 1: A Hypothetical Business Venture

  A small software company contracts with a marketing firm to launch a new app. The marketing firm breaches the contract by failing to deliver the agreed-upon campaign. The software company sues, claiming not only the money paid to the marketing firm and the immediate costs of finding a new firm, but also the lost profits from what they *believe* would have been millions of downloads and in-app purchases if the original campaign had been successful.

  Explanation: These claimed lost profits are speculative damages because the success of a new app, especially one that hasn't even been fully launched, is highly uncertain. Predicting millions in revenue from a hypothetical marketing campaign is based on conjecture rather than established facts or reasonable probabilities.

• Example 2: An Unlikely Career Path

  A college student is injured in a car accident caused by another driver's negligence. The student sues for medical expenses, pain and suffering, and lost wages from a part-time job. Additionally, the student claims damages for the lost opportunity to become a professional athlete, arguing that the injury prevented them from pursuing a highly competitive and improbable career path, even though they were only playing recreationally at the time of the accident.

  Explanation: The claim for lost earnings as a professional athlete constitutes speculative damages. While the student might have had athletic talent, the likelihood of achieving professional status is extremely low and depends on numerous unpredictable factors beyond the injury itself. Such a claim is based on a remote possibility rather than a reasonable expectation.

• Example 3: Future Real Estate Appreciation

  A homeowner hires a contractor to build an addition, but the contractor performs substandard work, causing structural issues. The homeowner sues for the cost of repairs and the immediate decrease in the property's market value. The homeowner also seeks damages for the lost future appreciation of their home over the next 30 years, arguing that if the work had been done correctly, their property would have significantly increased in value due to anticipated long-term market trends.

  Explanation: The claim for lost future appreciation is speculative damages. Predicting real estate market performance and a specific property's value growth over several decades is inherently uncertain and subject to countless economic and social variables. It is based on conjecture about distant future events rather than a demonstrable present loss.