Florafax International, Inc. v. GTE Market Resources, Inc

Brief Fact Summary. This case involves a breach of a contract for telecommunications services between two companies, causing one company to lose profits stemming from a third-party contract.

Synopsis of Rule of Law. Lost profits are recoverable so long as they are (1) foreseeable when the contract was made; (2) they directly or proximately result from the breach and (3) they are capable of accurate estimation.

Facts. The Plaintiff, Florafax International, Inc. (Plaintiff) entered into a contract with Bellerose Floral, Inc. in which the parties agreed that Plaintiff would handle a certain amount of floral orders for Bellerose Floral. This contract contained a clause stating that either party could terminate the contract upon sixty days written notice. Shortly thereafter, the Plaintiff entered into another contract with the Defendant, GTE Market Resources (Defendant), stating that the Defendant was to operate a call answering center on behalf of the Plaintiff. This contract contained a provision stating “in the event GTE ceases to perform its duties