Can you claim damages for loss of goodwill

Compensation for the loss of goodwill is intended to provide payment for the losses that occur when a business is forced to move and relinquish the benefits of its prior location. This includes compensation for the loss of patronage and expenses incurred to prevent the loss of patronage. As such, the process of valuing a business is often rather complex.

In the state of California, goodwill is defined as the intangible assets that a business accrues as a result of its location, reputation, skill or quality, and other circumstances that result in the probable retention of old patrons or the acquisition of new patrons. Business owners can present evidence of lost goodwill after proving to the court that they are entitled to compensation for the loss of goodwill.

Since goodwill is not comprised of tangible assets, proving entitlement to compensation for the loss of it can be difficult. Disclaimer: These codes may not be the most recent version.

California may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources. Any liability for goodwill shall be established and paid at the time of acquisition of the property by eminent domain or subsequent to notice that the property may be taken by eminent domain.

Primus sought permission to appeal on a wide range of matters, including the judge's calculation of quantum, but was refused permission on all but the true meaning and effect of the Goodwill Exclusion.

On appeal, Triumph maintained its submission that "goodwill" meant the good name, business reputation and connections of a business, and that since its claims were for overpayment due to the careless LRP, and not for lost business reputation, the Goodwill Exclusion did not apply.

The Court of Appeal upheld the decision at first instance, supported by the following observations:. This decision helpfully clarifies that the term "goodwill" will usually be considered to mean the good name, business reputation and connections of a business.

The clear take-away is that if parties wish to ascribe a different meaning to "goodwill" — whether that be an unusual, technical or non-legal meaning — they must spell that out in the relevant documentation as clearly and unequivocally as possible. Skip to Main Content Skip to Footer.