New York Court Explains When Lost Profits Are Recoverable

The New York Court of Appeals, the state's highest court, recently held in a 4 to 3 decision that a plaintiff could recover lost profits for a breach of contract—even though the contract precluded recovery of consequential and special damages. The decision is noteworthy for contract drafters who are advised to expressly exclude lost profits in a limitation-of-liability provision when that is the parties' intention.

The decision in Biotronik, A.G. v. Conor Medsystems Ireland, Ltd. concerned an exclusive distribution agreement for the sale of a medical device. Prior to the end of the agreement's term, the defendant manufacturer took the device off the market and terminated the agreement. The manufacturer paid the plaintiff distributor € 8.32 million and a 20% handling fee to reimburse the distributor for its inventory and the costs associated with the termination.