EN 
PT_BR 
Loss of profits are losses caused by the interruption of any of the activities of a company or independent professional, where the object is profit.
For example, not selling a product due to lack of stock, a machine that stops working and stops producing, or a traffic accident that takes a bus out of circulation.
A practical example capable of illustrating and explaining the issue more clearly is the following: imagine that an inattentive driver collides with a taxi, causing serious damage to the taxi driver's car.
In the case in question, it is clear that there was financial (material) damage to the taxi driver, since the vehicle is used to support himself and his family.
With the damage caused to the vehicle, the taxi driver will stop working for the time that his car is being repaired, and, therefore, will also stop receiving payment for his services during the same period.
As the taxi driver's source of profit will cease for the time that the car is being repaired, he will be entitled to compensation for lost profits. In other words, lost profits are applicable when an individual's source of income ceases due to a loss caused by a third party.
However, lost profits should not be confused with consequential damages, which would be the cost of repairing the taxi or any hospital expenses incurred by the taxi driver, for example.
Likewise, when we are faced with a financial loss caused by third parties (on purpose or not) but which does not impact their income assessment, there is no need to talk about lost profits, since, despite there being a decrease in the victim's assets, his profit does not cease due to this.
Therefore, only damage suffered by an individual or legal entity that causes them to stop earning a profit is subject to compensation for lost profits. However, for the case to be won in court, it is necessary to identify the damage suffered, the person who caused it and prove through documentary evidence how much profit was effectively lost.
Loss of profits in the solar sector
Lost profits are provided for in the Brazilian Civil Code, precisely in article 402, and are valid for all business sectors and individuals. In the segment of solar energy, the lost profit would be, for example, all the revenue that an energy generator would stop earning if there was any incident with its photovoltaic generation system.
Bringing the concepts above to everyday solar energy, let's imagine hiring a company to build a solar system over a period of 60 days. After the deadline, the contracted company does not deliver the agreed equipment and does not install it, leaving the contractor unable to earn a profit due to the delay.
According to lawyer Marina Meyer, legal director of ABGD (Brazilian Association of Distributed Generation), the reason can be caused by numerous external factors: ranging from a fortuitous event to the Covid-19 pandemic, for example, and also a high rise in the dollar, which caused several losses to several solar installers throughout Brazil. Given this, could there be a penalty for loss of profit?
“Yes, and there would also be a need for contractual renegotiation and the application of the initially agreed principle of balance, in addition to constitutionally guaranteed clauses such as proportionality and reasonableness in the application of fines or in the termination of the legal relationship between the parties”, explained Marina.
“In the case of partial compliance as a result of a response to a delay, pandemic or other cause that leads to any possible defective or incomplete non-compliance with the performance, the general rule – of contractual resolution – applies due to the consequence being the same, that is, default. Therefore, for the obligation to be considered fulfilled, it must be fulfilled in the contracted manner, at the place and time agreed and initially agreed between the parties”, said the lawyer.
We can also imagine a situation in which a defect occurs in an inverter (still within the warranty period), but which causes damage or delay to the installer. Then, the manufacturer does not replace the device or delays in replacing it, causing the contractor to lose 12 months of energy generation. Would the customer have the right to be compensated for lost profits?
According to the expert, yes, and the peculiarities of each case must be analyzed. “It is important to highlight that it will be up to the victim to prove the probability of real gain. However, when one of the parties demands compensation from the other and takes legal action against it, we must understand that, in most judicial decisions, objective proof of the facts, evidence and losses is essential, in order to have the characterization that the duty of compensation for lost profits must be established under probable hypotheses. In other words, when granting the loss of profit there must be a judgment of probability”.
The legal director of ABGD also highlighted that it must be remembered that in the judgment of the case discussed above, it is worth mentioning the equity of the obligations between the parties, since their imbalance can cause several distortions in the signed contracts, which is why it must be reviewed and analyzed through a new renegotiation.
“It is always important for all parties to the contractual relationship to know their rights and be guided by good specialized professionals to help them”, concluded Marina Meyer.
Another examples
Let's go: a company promises that it will generate a certain amount of MWh per year and generates less. For example, 30% less than promised. Are there lost profits? According to lawyer Franciane Vilar Fruch, not in this case.
“We would be facing a failure in the provision of services. Regardless of whether it is culpable (without intention) or intentional (with intention), the company may be held liable for this failure, and an action for compensation must be proposed. However, there is no loss of profit, only a claim for compensation for failure to provide services”, explained Franciane.
According to her, only if the failure to provide causes economic losses to the end consumer, causing him to be deprived of making a profit, will the loss of profits figure, depending on the case, be applicable, with the supplier having to compensate for all losses. caused and the profits that the consumer stopped earning, provided that the causal link between the failure to provide and the cessation of profit is duly proven.
Bringing another example to the daily life of the photovoltaic sector: let's imagine that the company designed and installed a solar system. However, it presented a problem. It was a design error and the system stopped. Consequently, the client had a financial penalty and no longer had the benefit. Are there lost profits?
“No, considering that the mere loss or financial penalty does not constitute a loss of profit. However, as the client suffered a financial penalty caused exclusively by a supplier's error, material compensation for emerging profits is appropriate in order to reimburse the amounts of the penalty suffered”, said the lawyer.
Another situation: I designed the system and the equipment had problems, but it wasn't a design error, after all, electronic equipment is subject to failure. I solved the problem, but does the time it was stopped include lost profits?
"Yes. If the time in which the electronic equipment remained stopped resulted in losses and damages for the end consumer, causing them to lose financial income and even stop earning them, making their profit unfeasible, it may give rise to compensation for losses and damages. ”, emphasized the expert.
What if a company has installed a solar system and it is working normally. However, after 60 days, there was a problem with the photovoltaic inverter. It took 20 days, for example, to resolve the situation. Is there lost profits for these 20 days?
According to Franciane Vilar Fruch, if during the 20 days of maintenance of the device the consumer has stopped making a profit due to the problem with the photovoltaic inverter, lost profits may be appropriate, however, extensive demonstration of evidence is required and this decision must be rendered judicially.
The lawyer also highlighted that in the Brazilian legal system there is no type of deadline that justifies the figure of lost profits, it is enough that there is a substantial loss in the profit perceived by the consumer caused by a third party for its characterization.
“The customer can charge for lost profits as soon as the equipment fails, as long as they prove that they effectively stopped earning profits due to the problem presented. The compensation amount is calculated based on the consumer’s average daily income”, he reported.
Insurance for lost profits
Given the situations presented, mainly because there is no deadline that justifies the penalty for lost profits, the best solution, if the distributor is sued, is to have insurance.
According to Vanda Somera, director of Visioni Corretora de Seguro, coverage for lost profits is optional and must be contracted as part of another insurance contract. “In order to enforce the coverage, the company must have organized accounting, as at the time of the accident, insurers will request proof of billing movements to provide compensation in accordance with the effective contract.
In the solar energy market, she highlighted that such insurance can be taken out in several ways. “When the company is carrying out installation work in a commercial or industrial location. At this time, insurance for lost profits can be included in the Basic Civil Liability Coverage for Engineering Risk, as if during the installation process, for whatever reason, the client's activities are completely or partially stopped, affecting operations of the company, the insurance company will take care of the compensation in accordance with the values contracted in the policy”, he explained.
For example: an installation company will carry out work in a shopping center and, after installation, an electrical outage occurs that prevents the establishments from operating for days. During the investigation, it was found that an installer dropped a bag of tools onto the primary cables and did not notice that the cable's insulation and structure had been compromised.
As the days went by, the heating and normal use of electrical energy in this cable broke and caused the breakdown. As it was in a place where a defect would not be likely, the electricians took hours and days to identify and solve the problem. It was found that, during this period, the stores stopped making revenue and, therefore, making a profit. “In this case, the company that caused the loss will be ordered to make compensation. What would your company be like if you hadn’t taken out the insurance?” asked Vanda.
Another time when this coverage can be taken out is when the company is taking out insurance to protect its assets, such as fire insurance.
“Let's give an example: your facilities, with all the stock from a large project, caught fire and everything was lost. Until you resume your activity, you will be covered by loss of profits insurance. Solar energy companies can also, through business insurance, take out this coverage to protect their assets”, he concluded.
'It is a challenge to implement insurance for lost profits in the solar sector'
For Demarest lawyer Pedro Dante, a specialist in the energy sector, insurance for lost profits is essential, but it is a challenge to implement it to be more common in the electricity sector, especially in the photovoltaic DG (distributed generation) market.
“I think these insurances are essential as we are starting to see some delays in the solar segment, even more so in DG projects. This generator, if it has committed to the minimum benefit guaranteed to the consumer, will have to comply with this compensation. And then, insurance would be interesting to predict these delay issues”, commented Dante.
However, according to the expert, this type of insurance is little used in Brazil. “It is a new product in the energy sector, mainly due to the difficulty of pricing. It becomes very expensive when, precisely, the insurer is unable to price how much he may have to pay if there is an accident with the solar generator. Of course, one thing is if this generator has a portfolio of customers in service, it can be priced. But then there are analyzes and all the penalties in the contract. So, it’s not something simple, it’s not something trivial”, he explained.
According to him, to develop this insurance in Brazil it is necessary to align the interests of buyers with those of insurers. “This type of product is not specific to the solar segment. Insurance increases costs and the parties tend not to contact each other, but if damage occurs, the compensation can be high”, said the lawyer. “The main point is that the issue of pricing for insurers is difficult given the predictability of energy prices”, he concluded.
For Franciane, lost profits are a legal figure that can be applied to any commercial establishment or even individuals. However, as each case must be analyzed separately, there is this difficulty in pricing.
“Even if a certain business activity has a greater risk of being sued in court for lost profits, in court, each case is analyzed individually, as the sentence will depend on an entire set of evidence to be presented to the judge, and said set of evidence, in turn , will vary with each sale and the situation”, commented the expert.
However, according to her, depending on the company, paying a certain amount more for insurance that covers loss of profits could be a worthwhile strategy, as the client will be covered in the event of a penalty.
“For other companies, paying a legal team to provide extensive consultancy and defend them in possible legal claims, providing support in a diverse range of actions (including loss of profits) can be another equally interesting strategy”, he added.
