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PharmAthene, Inc. Message Board

  • msgbrdpstr msgbrdpstr Jun 27, 2013 6:52 PM Flag

    Hudson is off the mark.

    Search "Lost Profit or Lost Chance: Reconsidering the Measure of Recovery for Lost Profits in Breach" You will see this 2007 law journal analysis is a worthwhile read. Click the first PDF in your search results.

    I expect an award substantially similar to Parson's original, this time clearly identifying the LATS as providing 'reasonably certain' terms upon which the value of the contract may be calculated. The DE SC sent it back with as much guidance.

    Had Parsons' originally awarded amount been an award at law rather than equity, it likely would have been upheld by the DE SC. Nonetheless the original award was equitable, and as a technical matter it could not be upheld outright, once the DE SC found there was in place a binding contract.

    The situation will ultimately result in an award for "Loss of Chance."

    From the above referenced law journal article at page 567:
    "The first American case to apply the loss of chance remedy ... was Taylor v. Bradley, an 1868 decision by the Court of Appeals of New York. Taylor was a farmer who had entered into a contract to farm land ... with Bradley, who was only a prospective purchaser of the parcel ... Bradley decided not to purchase the farmland and was therefore unable to keep his contractual obligations ... Taylor sued for breach ... but ... was unable to identify any damages other than loss of potential profits. In finding for Taylor (and reversing the trial court), the Court of Appeals determined that justice required Taylor receive the value of his contract—the value of the opportunity [i.e. the lost chance]....
    Taylor is something of an anomaly in the history of cases dealing with contract damages awards. Since it was..., almost no other courts, including those in New York, have followed it....
    [However in 1931] the U.S. Supreme Court ... in Story Parchment v. Paterson Parchment ... affirmed Taylor ... [rejecting] all-or-nothing ... and [holding] the wrongdoer [should not] profit from his actions."

    Sentiment: Strong Buy

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    • Latest article is full of "What if's", Maybes, Possiblys, Probablys and many other phrases and no facts. Alpha Open Letter to Judge is interesting and shows SIGA supports concerns about the future ruling for PIP.

    • Good read, thanks for reference. I especially found the description of the goal of contract damages to be useful as backdrop when considering what Parsons may do. According to this article ". . . the goal of contract damages is restorative. In other words, the aggrieved party should be placed back in the position he
      would have been in had the contract not been breached."

      Chancery Court's view that were it not for SIGA's breach of agreement to negotiate in good faith, PIP would have a license consistent with the terms of the LATS, has been upheld by Delaware Supreme Court. To be placed back in position PIP would have been had the contract not been breached would be establishing economic terms similar to those of the LATS. In doing this, I agree with you that Parson's will arrive at economic terms substantially similar to those he provided in his original ruling.

    • The situation will ultimately result in an award for "Loss of Chance."

      You better hope not. Taylor was a Farmer Taylor's Loss of profit was proven by past performance as a farmer. By looking at Taylor's proven prior years Profits the chance Loss could be determined. Both Siga and PiP were and still are Start-up's(No record of profit or ability to bring a product to market). Do a little reading and find out what the accepted Remedies are for Start-ups. Cases that break new ground are Black/White examples, this case has both Parties Junk Stradled on the Moral Fence+Both being Start-ups = you win here's your $1

      • 1 Reply to beepoe111
      • You are wrong in your presentation of legal remedy and limitations that may exist because of the firm being a startup. Courts have moved away from this "rule" and instead have taken view that simply because a firm is startup with no history of profits does not mean by rule no profits can be reasonably estimated. Which brings me to point I've made on SIGA board "doubts about the certainty of lost profits are to be resolved against the breaching party rather than the injured
        party. (google "General Principles of Contract Damages Stockmeyer", select PDF from Michigan Bar and look at page 34 discussion of certainty limitations for this quote).

        From another legal article having to do with issue of expectation damages and startups:
        ". . . courts in the past generally did not award loss of profits resulting from a breach of contract relating to an unestablished business. This is because it was felt that prospective profits were too uncertain, contingent or speculative. However, because of the increasing acceptance by the courts of expert testimony and credible projections, particularly if the plaintiff can show experienced stewardship, there appears to be more admissibility of such claims. Nonetheless, there must be strong proof. This was expressed, for example, by the Michigan Supreme Court in Fera v. Village Plaza, Inc. which stated:

        'These cases and others since should not be read as stating a rule of law which prevents
        every new business from recovering anticipated lost profits for breach of contract.
        The rule is merely an application of the doctrine that [in] order to be entitled to a
        verdict, or a judgment, for damages for breach of contract, the plaintiff must lay a
        basis for a reasonable estimate of the extent of his harm, measured in money.'

        In another U.S. decision, Barbier v. Barry, the court stated that a new business will not be
        denied recovery of damages for lost profits merely because it is not an established business.

 
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