PJC Business 2024

PJC 115.5

D AMAGES

PJC 115.5

Instructions on Consequential Damages—Contracts

Lost profits that were a natural, probable, and foreseeable consequence of Don Davis ’s failure to comply. Damage to credit reputation that was a natural, probable, and foreseeable consequence of Don Davis ’s failure to comply.

COMMENT

When to use. PJC 115.5, with its added element of foreseeability, should be used for recoverable elements of consequential damages that do not, as a matter of law, directly flow from the defendant’s breach. See Basic Capital Management, Inc. v. Dynex Commercial, Inc. , 348 S.W.3d 894, 901–02 (Tex. 2011); Stuart v. Bayless , 964 S.W.2d 920, 921 (Tex. 1998). See PJC 115.4 Comment. Foreseeability. “Foreseeability is a fundamental prerequisite to the recovery of consequential damages for breach of contract.” Basic Capital Management, Inc. , 348 S.W.3d at 901. “A plaintiff may recover consequential damages only if ‘the parties contemplated at the time they made the contract that such damages would be a proba ble result of the breach.’” MSW Corpus Christi Landfill, Ltd. v. Gulley-Hurst, L.L.C. , 664 S.W.3d 102, 107 (Tex. 2023) (discussing “ Basic Capital ’s foreseeability stan dard” and quoting Signature Industrial Services, LLC v. International Paper Co. , 638 S.W.3d 179, 186 (Tex. 2022)). Consequential damages may be recovered only if proved to be the “natural, probable, and foreseeable consequence” of the defendant’s breach. Basic Capital Management, Inc. , 348 S.W.3d at 901–02. Caveat. Damages usually characterized as consequential may be deemed direct if they are so directly related to the contract that they stem as a matter of law from the breach. Conversely, not all factually foreseeable damages are legally recoverable. See Myrtle Springs Reverted Independent School District v. Hogan , 705 S.W.2d 707, 710 (Tex. App.—Texarkana 1985, writ ref’d n.r.e.) (loss of earning capacity and mental anguish not recoverable for breach of teaching contract). Lost profits. If lost profits are not proved with reasonable certainty but are merely speculative, no recovery is allowed as a matter of law, and this instruction should not be included in the damages question. Texas Instruments, Inc. v. Teletron Energy Management, Inc. , 877 S.W.2d 276, 278–81 (Tex. 1994); see Southwestern Energy Production Co. v. Berry-Helfand , 491 S.W.3d 699, 711 (Tex. 2016). If, how ever, there is legally sufficient evidence of lost profits, a fact question is raised. South west Battery Corp. v. Owen , 115 S.W.2d 1097, 1099 (Tex. 1938).

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