California Civil Jury Instructions (CACI)
1921. Buyer’s Damages for Purchase or Acquisition of Property—Lost Profits
[Name of plaintiff] may recover damages for profits [or other gains] [he/she/it] would have made if the property had been as represented. [Name of plaintiff] can recover these profits [or other gains] only if [he/she/it] has proved all of the following:
1. That [name of plaintiff] acquired the property for the purpose of using or reselling it for a [profit/gain];
2. That [name of plaintiff] reasonably relied on [name of defendant]’s [false representation/failure to disclose/promise] in entering into the transaction and in anticipating [profits/ gains] from the use or sale of the property; and
3. That [name of defendant]’s [false representation/failure to disclose/promise] and [name of plaintiff]’s reliance on it were both substantial factors in causing the lost profits.
You do not have to calculate the amount of the lost profits with mathematical precision, but there must be a reasonable basis for computing the loss.
Directions for Use
This instruction should be read immediately after CACI No. 1920, Buyer’s Damages for Purchase or Acquisition of Property, if the plaintiff is claiming lost profits.
Sources and Authority
- Civil Code section 3343(a)(4) provides:
Where the defrauded party has been induced by reason of the fraud to purchase or otherwise acquire the property in question, an amount which will compensate him for any loss of profits or other gains which were reasonably anticipated and would have been earned by him from the use or sale of the property had it possessed the characteristics fraudulently attributed to it by the party committing the fraud, provided that lost profits from the use or sale of the property shall be recoverable only if and only to the extent that all of the following apply:
(i) The defrauded party acquired the property for the purpose of using or reselling it for a profit.
(ii) The defrauded party reasonably relied on the fraud in entering into the transaction and in anticipating profits from the subsequent use or sale of the property.
(iii) Any loss of profits for which damages are sought under this paragraph have been proximately caused by the fraud and the defrauded party’s reliance on it.
- “With glaring inconsistency, California’s statutory structure before 1971 permitted recovery of lost profits and earnings under Civil Code section 3333 in fraud cases which did not concern the ‘purchase, sale or exchange of property,’ and even in simple negligence cases and breach of contract cases the injured parties could recover lost profits and earnings, while the ‘out of pocket’ rule barred the fraud victim in property transaction cases from recovering more than the difference between the amount he paid for the property and its actual value.” (Channell v. Anthony (1976) 58 Cal.App.3d 290, 312 [129 Cal.Rptr. 704], internal citations and footnote omitted.)
- “The Legislature removed all doubt concerning the recovery of loss of profits resulting from the fraudulently induced property acquisition. Clearly and specifically, lost profits proximately caused are recoverable. The cases cited, the arguments made concerning Civil Code section 3343 limitations are simply not relevant to post-1971 proceedings, where profits are the claimed loss. Civil Code section 3343 as amended, in so many words, authorizes recovery of lost profits.” (Hartman v. Shell Oil Co. (1977) 68 Cal.App.3d 240, 247 [137 Cal.Rptr. 244].)
6 Witkin, Summary of California Law (10th ed. 2005) Torts, §§ 1714—1716
3 Levy et al., California Torts, Ch. 40, Fraud and Deceit and Other Business Torts, § 40.23 (Matthew Bender)
23 California Forms of Pleading and Practice, Ch. 269, Fraud and Deceit (Matthew Bender)
10 California Points and Authorities, Ch. 105, Fraud and Deceit (Matthew Bender)