Economic damages are determined for actions usually arising out of breach of contract, securities violations or tort law. The damages available for each case are defined by law. In the case of a breach of contract action or securities violation, the damages may not necessarily be the same as the value of the shares of stock. Other damages may apply. In tort law, punitive damages are also often awarded.
The amount of due diligence required in these cases may be extensive, because the damages suffered are not determined by assessing the fair market value of a transaction, but the amount that would make the plaintiff whole.
Economic damages calculations require a more extensive evaluation of the legal principals supporting the cause of action. For instance, the damages must be proximately incurred due to the actions of the defendant. It may be necessary to determine if some, or all, of the damages resulted from the defendant's actions. Should either of these be the case, Sack Associates will analyze the financial documents to determine the actual damages.
In addition, in contract and personal injury actions, the damages that plaintiffs sustain must be foreseeable. In a contract case, the defendant is only responsible for the amount of damages that were foreseeable when the breach occurred. In contrast, in personal injury actions the defendant is liable for all resulting damages foreseeable and unforeseeable. In a personal injury case, damages need to be foreseeable, but not the amount of damages.
A plaintiff is required to make an effort to mitigate or reduce damages. Sack Associates is able to analyze the plaintiff's ability or lack thereof to mitigate.
Our analysis is detailed and accurate. For example, in a loss related to damaged or destroyed equipment, Sack Associates will consider the useful life of the equipment, the incremental sales, the incremental expenses, and the income tax expense associated with the equipment and depreciation. Economic damages are calculated in cases involving business interruption, contractual damages, lost profits, personal injury, wrongful death, and wrongful termination.
