M & R Contractors & Builders v. Michael

In M & R Contractors & Builders v. Michael, 215 Md. 340, 347, 138 A.2d 350 (1958), the Court of Appeals clarified the proof required for recovery of collateral lost profits in a breach of contract action. That case was an action to recover direct (not collateral) lost profit damages for breach of a construction contract. The Court explained that the usual three elements of damages must be required to recover lost profits, generally: proximate cause of the loss; that, when the contract was executed, the defendant reasonably could have foreseen that the loss of profits would be a probable result of the breach; and that the lost profits were reasonably certain to occur. The Court drew a distinction between the proof necessary to recover collateral lost profits and that necessary to recover direct lost profits, emphasizing that the latter is less strict: A plaintiff is less likely to be permitted to show that the breach has caused him to be unable to make or perform other contracts collateral to the one broken, contracts to which the defendant was not himself a party. The profits from these contracts may be regarded as too remote or too speculative. Id. at 347.