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© 2009 CCH. All Rights Reserved. Chapter 10 119 Chapter 10 Commercial Damages CHAPTER SUMMARY Overview When harm comes to one person or party who suffers an economic loss as a result, there are fi nancial considerations. If the loss is sustained from the harmful act of another, there may be damages. In a legal setting, the person harmed (plaintiff) and the person who harmed the plaintiff (defendant) may not agree as to the facts surrounding the harm and the damages. Often experts are called in to resolve the issues and present them in court. The forensic accountant role in such disputes can vary from case to case, but it is often concerned with the calculation of damages. Commercial damages may relate to either loss of pro fi ts or the reduction in value of a business entity. In rare cases, there may be both lost pro fi ts and reduction in business value. The Expert ¶10,001 Expert Witnesses’ Quali fi cations Sources differ on what quali fi cations are desirable for an expert witness in damages. Certainly, the expert should be trained and experienced in quantitative analysis. According to the Federal Judicial Center’s Reference Manual on Scienti fi c Evidence, the method used and the substance of the damages claim dictate speci fi c areas of specialization that experts need. The accountant who serves as expert witness will often be a CPA or hold a Ph.D. Often the accountant may also have an MBA degree, and a growing number of practitioners are seeking a forensic-type credential. ¶10,011 Expert Witnesses’ Testimony Requirements Daubert Factors. In the Daubert case, the U.S. Supreme Court characterized the Court’s function as that of a ‘‘gatekeeper’’ in determining whether an expert’s testimony constitutes ‘‘scienti fi c knowledge’’ that will assist the trier of fact to understand or determine a fact in issue. A judge performs this function by ensuring that an expert’s testimony is relevant and reliable. The Supreme Court in Kuhmo Tire Co. extended the principles of Daubert applicable to scienti fi c experts to all experts possessing ‘‘technical’’ or ‘‘other specialized’’ knowledge. Voir Dire Challenges. Voir dire (examination of witness’s competency) is another legal obstacle to expert testimony in a damages case. Usually the opposing attorney is questioning the expert’s skills, education, training, knowledge, and/or experience to be an expert witness. Basics of Damages Litigation ¶10,021 The Legal Framework of Damages In order to win an award for damages, the injured party must generally prove two points: (1) that the other party was liable for the damage, and (2) that the injured party suffered damages as the results of the actions or lack of actions of the offending party. This usually requires the proof of three issues by the legal team: proximate cause, reasonable certainty, and foreseeability.
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