McLAUGHLIN, Circuit Judge:

BACKGROUND

This case involves a closely-held cable television corporation that imploded just as it was about to launch its flagship channel. In 1988, brothers Russ and Les Hilliard formed International News Network, Inc. (“INN”) to distribute a British news and information channel in the United States (the “Channel”). Prior to this ambitious venture, the Hilliard brothers owned small mid-western cable television companies with an aggregate of only 66,000 subscribers.

To secure large-scale expertise and prestige, INN brought in Reese Schonfeld, a founder and former President of Cable News Network (“CNN”) — initially as a consultant, and later as a shareholder — to help INN negotiate with the British Broadcasting Corporation (the “BBC”) for a programming license. INN also retained Daniels & Associates (“Daniels”), the nation’s leading financial services company for the cable industry, to prepare a business plan and to drum up investors.

In February 1994, the Hilliards and Schonfeld executed a written Shareholders’ Agreement whereby each became a one-third shareholder in INN in return for a $10,000 capital contribution. In addition, the Hilliards, who had each already lent $300,000 to INN, agreed to lend up to another $350,000 to INN if necessary to meet its obligations to the BBC. In lieu of a further cash contribution, Schonfeld agreed to invest his time and effort.

*169The Shareholders’ Agreement confirmed the parties’ understanding that INN itself would not operate the Channel. Instead, INN would invest in a .yet-to-be-formed operating entity. INN’s shareholders, if they chose, could increase their personal stakes in the Channel by making additional cash investments in the separate operating entity. The agreement said nothing about the percentage of profits that INN, or any other equity investor, would receive from the Channel’s operation.

Although the Shareholders’ Agreement provided for ■ a two-member board of directors (one chosen by Schonfeld, the other by the Hilliards), no board members were formally designated. It appears, however, that Schonfeld assumed the three roles of director, President and CEO of INN. Russ Hilliard acted as the other director. Les. Hilliard apparently played no role in INN, other than investor.

The final piece of the puzzle fell into place on March 4, 1994, when the BBC granted INN a 20-year exclusive license to distribute its news and information programming in a 24-hour format, commencing not later than February 1995 (the “March Supply Agreement”). The agreement provided for INN’s assignment of the benefits and privileges of the agreement to the yet-to-be-formed operating entity upon written consent of the BBC, whose consent would not be unreasonably withheld. The BBC retained its right, however, to withhold consent to any delegation of INN’s duties under the contract.

As INN’s first step to implement the March Supply Agreement, and based on assumptions and figures provided by the Hilliards and Schonfeld, Daniels prepared a revised business plan for INN (the “INN ■ Business Plan”). Schonfeld and Russ Hil-liard used this revised plan to attract investors.

Soon after the execution of the March Supply Agreement, Cox Cable Communications (“Cox”), one of the largest cable operators in the United States, entered the picture. Cox wanted to launch two BBC channels in the United States — one with news and the other with entertainment programming. However, because of INN’s exclusive programming rights, Cox would be unable to operate the news channel. Accordingly, Cox offered to purchase INN’s contract rights for $1.7 million cash ($700,000 at closing and $100,000/year for ten years thereafter), plus a 5% equity interest in both of Cox’s proposed BBC channels.

Finding Cox’s offer reasonable, INN entered into a letter agreement with Cox on June 2, 1994 accepting the proposed terms of sale (the “Cox Agreement”). Under the Cox Agreement, Cox retained the right to buy out INN’s 5% interest in the BBC channels in their tenth year of operations. The price that Cox agreed to pay for that interest was 20% of the tenth-year gross revenues of both channels. The parties agreed to enter into certain “definitive” agreements QLe., a Shareholders’ Agreement, Buy-Out Agreement and consulting agreement for Schonfeld) once they received final approval from the BBC.

In light of the Cox negotiations, INN and the BBC agreed to temporarily suspend the March Supply Agreement. This, in turn, required a postponement in the Channel’s launch date for several months.

Although the BBC had approved all financial aspects of the Cox .deal, in August 1994, the BBC, on behalf of Cox, requested an extension of time to work out certain editorial issues concerning the proposed entertainment channel. Having decided to pursue the profits from the Channel themselves rather than selling out to Cox, the Hilliards denied this request. Schonfeld reluctantly agreed to abort the Cox deal.

In October 1994, the FCC promulgated a new rule allowing cable operators to charge an increased per-channel monthly rate for up to six new- channels as of January. 1, 1995. To take advantage of this window of opportunity, INN asked the BBC'to accelerate the launch date of the Channel.

*170INN and the BBC signed an “Interim Agreement,” effective December 14, 1994, in which the BBC agreed to provide provisional programming as early as possible, and to develop an “Americanized” programming format to become available to INN no later than December 31, 1995 under a revised 20-year supply agreement (the “December Supply Agreement”). In consideration for the interim programming feed, INN agreed to pay the BBC approximately $20 million in installments beginning January 3, 1995. The BBC retained the right to terminate the Interim Agreement if, by January 31, 1995, INN had failed to get letters indicating an intent to carry the Channel from cable systems with an aggregate of at least 500,000 subscribers. The December Supply Agreement also: (1) capped INN’s initial capital contribution to the operating entity at 15%; and (2) gave the BBC a non-dilutable 20% equity interest in the operating entity.

According to three witnesses — Richard Blumenthal (INN’s attorney), Schonfeld and Mark Young (a representative of the BBC) — Russ Hilliard repeatedly promised orally that he and his brother would personally fund the Interim Agreement. These promises were allegedly made to induce Schonfeld and the BBC to abandon the March Supply Agreement and enter into the Interim and December Supply Agreements despite the fact that INN did not yet have the cash available to make the necessary payments to the BBC. Schonfeld and Blumenthal testified in depositions that the Hilliards said they planned to invest up to $20 million in the operating entity as financing for the BBC payments. However, there is no oral or written agreement memorializing the precise amount promised, or defining the liabilities and remedies of the parties in the event of the Hilliards’ failure to fund.

By mid-January 1995, the Hilliards had provided none of the promised funding and INN was in default under the Interim Agreement. In February 1995, the parties met in New York to discuss the situation. Russ Hilliard did not deny that he and his brother had promised to fund the Interim Agreement. He claimed, however, that funding had been withheld because INN was having difficulty obtaining cable operator support. Rather than suing the Hilli-ards and INN for breach of contract, the BBC offered a chivalrous solution: in exchange for the dissolution of both the Interim and December Supply Agreements, the BBC agreed to release the Hilliards and INN from any and all claims arising out of their breach of the oral agreement and Interim Supply Agreement.

Schonfeld alleges that the Hilliards never really intended to fund the Interim Agreement themselves. He claims that, all along, they had been unsuccessfully attempting to get the money from William Bresnan, the CEO of Bresnan Communications (which is 80% owned by TCI Cable). Russ Hilliard has admitted in deposition testimony that: (1) the funds he had promised were supposed to come from Bresnan or TCI, not from himself and his brother; and (2) he knew the BBC would never have signed the Interim Agreement had it known the truth (ie., would never have agreed to make the Interim Agreement contingent on funding from Bresnan or TCI).

In April 1995, Schonfeld commenced this diversity action in the United States District Court for the Southern District of New York (Mukasey, /.). Schonfeld alleged derivative claims on behalf of INN for: (1) fraud; (2) breach of contract; (3) promissory estoppel; (4) breach of the fiduciary duties of loyalty and care; and (5) mismanagement and waste of corporate assets. He also advanced personal claims for: (1) breach of contract; (2) promissory estoppel; and (3) breach of the fiduciary duties of loyalty and care.

In a nutshell, Schonfeld alleged that the Hilliards induced him and INN to abandon the March Supply Agreement and enter into the Interim and December Supply Agreements by falsely representing their intention to personally fund the Interim *171Agreement. He alleged that the Hilliards’ breach of this oral agreement to fund led directly to INN’s breach of the Interim Agreement and subsequent loss of the December Supply Agreement.

The damages requested by Schonfeld fall under three distinct categories: (1) lost profits that INN would have received had the Channel been successfully launched; or (2) in the alternative, the market value of the lost supply agreements (“lost asset” damages); and (3) punitive damages (solely in connection with his fraud and breach of fiduciary duty claims).

After discovery, the Hilliards moved for summary judgment arguing that, under governing New York law, Schonfeld could not establish lost profits or lost asset damages, and was not entitled to punitive damages. The Hilliards also contended that the oral promise to fund the Interim Agreement was unenforceable because it was too indefinite and not in writing.

To establish lost profit damages, Schon-feld relied on: (1) INN’s Business Plan; (2) the revenues projected by Cox in connection with its own proposed BBC news channel; (3) the BBC’s, the Hilliards’ and Schonfeld’s “belief’ that the proposed operating entity would be profitable; and (4) the reports and deposition testimony of two damage experts — Donald Curtis and William Grimes.

Donald Curtis, a certified public accountant at Deloitte & Touche LLP, testified that damages from lost profits were between $112 to $269 million. Curtis based these figures on the revenue and expense projections contained in the INN Business Plan. William Grimes; a cable industry executive, testified to the assured success of the Channel by comparing it to other cable channels such as CNN and The Learning Channel. The defendants moved to preclude the testimony of these experts for failure to meet the scientific reliability standards set forth in Daubert v. Merrell Dow Pharm., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993), and its progeny.

With respect to lost asset damages, Schonfeld relied.entirely on the purchase price contained in the Cox Agreement to establish the market value of the March and December Supply Agreements. Calculating a present value for the portion of the purchase offer that comprised a 5% equity interest in the Cox channels, and adding this amount to the cash portion of the offer, Curtis concluded that the total purchase price agreed to in the Cox Agreement was $17.13 million.

Relying on Kenford Co. v. County of Erie, 67 N.Y.2d 257, 261, 493 N.E.2d 234, 235, 502 N.Y.S.2d 131, 132 (1986) (“Kenford I ”), the district court held that Schon-feld could not prove, with reasonable certainty, the existence or amount of damages for lost profits. With respect to Curtis’s expert testimony, the district court noted that “the technique used probably would not survive a Daubert inquiry.” The court, however, declined to exclude the evidence under Daubert because it had already held that Schonfeld failed to establish a foundation for the existence of damages for lost profits.

Finding Schonfeld’s claims for lost asset damages to be nothing more than a “back door” attempt to recover lost profits, and again relying on Kenford I, the district court held that Schonfeld could not establish lost asset damages with reasonable certainty because the value of the supply agreements also depended on their ability to generate profits. In addition, the district court held that Schonfeld had failed to establish that the supply agreements were “recoverable assets.” All expert testimony proffered to establish their market value was, therefore, excluded as irrelevant.

Finally, the court ruled that, as a matter of law, Schonfeld was not entitled to punitive damages.

Accordingly, the district court granted summary judgment dismissing all claims, with the exception of the fraud claim (which the court limited to out-of-pocket *172damages of $15,000). The ground for the sweeping dismissal was that Schonfeld had failed to demonstrate any damages. The defendants’ arguments concerning the enforceability of the alleged oral contract were not addressed. See Schonfeld v. Hilliard, 62 F.Supp.2d 1062 (S.D.N.Y.1999).

Plaintiff, Schonfeld, now appeals, arguing that the district court erred by: (1) excluding the expert testimony offered to support his claim for lost asset damages; (2) dismissing all claims (other than fraud) for failure to establish the existence of, or entitlement to, the damages sought; and (3) limiting his recovery under the fraud claim to $15,000.

For the reasons set forth below, we affirm in part, reverse in part, vacate and remand.

DISCUSSION

We review a district court’s grant of summary judgment de novo, drawing all inferences and resolving all ambiguities in favor of the non-movant. See Parker v. Columbia Pictures Indus., 204 F.3d 326, 332 (2d Cir.2000). Summary judgment is proper only if the admissible evidence establishes that “there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Fed.R.Civ.P. 56(c).

The issues before us on appeal are whether Schonfeld adduced sufficient evidence to establish the existence of damages for lost profits or lost assets, and his entitlement to punitive damages.

I. Lost Profits

Schonfeld argues that the district court erred by dismissing his damage claims for lost profits. We agree with the district court.

In an action for breach of contract, a plaintiff is entitled to recover lost profits only if he can establish both the existence and amount of such damages with reasonable certainty. See Kenford I, 67 N.Y.2d at 261, 493 N.E.2d at 235, 502 N.Y.S.2d at 132. “[T]he damages may not be merely speculative, possible or imaginary.” Id. Although lost profits need not be proven with “mathematical precision,” they must be “capable of measurement based upon known reliable factors without undue speculation.” Ashland Mgt. Inc. v. Janien, 82 N.Y.2d 395, 403, 624 N.E.2d 1007, 1010, 604 N.Y.S.2d 912, 915 (1993). Therefore, evidence of lost profits from a new business venture receives greater scrutiny because there is no track record upon which to base an estimate. See Kenford I, 67 N.Y.2d at 261, 493 N.E.2d at 235, 502 N.Y.S.2d at 132. Projections of future profits based upon “a multitude of assumptions” that require “speculation and conjecture” and few known factors do not provide the requisite certainty. Id., 67 N.Y.2d at 262, 493 N.E.2d at 236, 502 N.Y.S.2d at 133.

The plaintiff faces an additional hurdle: he must prove that lost profit damages were within the contemplation of the parties when the contract was made. See Ashland Mgt., 82 N.Y.2d at 403, 624 N.E.2d at 1010, 604 N.Y.S.2d at 915. “The party breaching the contract is liable for those risks foreseen or which should have been foreseen at the time the contract was made.” Id. Where the contract is silent on the subject, the court must take a “common sense” approach, and determine what the parties intended by considering “the nature, purpose and particular circumstances of the contract known by the parties ... as well as what liability the defendant fairly may be supposed to have assumed consciously.” Kenford Co. v. County of Erie, 73 N.Y.2d 312, 319, 537 N.E.2d 176, 179, 540 N.Y.S.2d 1, 4 (1989) (“Kenford II”) (internal quotation marks and citation omitted); accord Ashland Mgt., 82 N.Y.2d at 404, 624 N.E.2d at 1011, 604 N.Y.S.2d at 916.

The district court found Schonfeld’s lost profit claims “highly analogous” to those raised in Kenford I. We do too. In Ken-ford I, Erie County had entered into a *173contract with the Kenford Company, Inc. and Dome Stadium, Inc. (“DSI”) for the construction and operation of a domed stadium. 67 N.Y.2d at 260, 493 N.E.2d at 234, 502 N.Y.S.2d at 131. In exchange for the donation of the land, the contract provided that the County would begin construction within 12 months of the contract date and that, upon its completion, the County would enter into a 20-year management agreement with DSI. See id., 67 N.Y.2d at 260, 493 N.E.2d at 234-35, 502 N.Y.S.2d at 131-32. DSI sued the County for breach of contract when construction was not timely commenced, seeking lost profits that it would have received under the management agreement. See id., 61 N.Y.2d at 260, 493 N.E.2d at 234, 502 N.Y.S.2d at 131. The Court of Appeals held that DSI could not recover lost profits because their existence could not be proven with sufficient certainty. See id., 67 N.Y.2d at 262-63, 493 N.E.2d at 236, 502 N.Y.S.2d at 133.

Here, the district court concluded that the Channel was a new entertainment venture similar to the proposed stadium in Kenford I. The operating entity’s profits, the court noted, “were purely hypothetical, stemming from the sale of untested programming to a hypothetical subscriber base, sold to advertisers at a hypothetical price and supported by hypothetical investors and carriers.” Schonfeld, 62 F.Supp.2d at 1079. After reviewing the seemingly endless list of assumptions upon which Schonfeld’s expert relied in determining lost profits, the court held that Schonfeld could establish neither the existence nor the amount of lost profits with reasonable certainty. The court also concluded that lost profits were not within the contemplation of the parties. We fully agree with the district court’s analysis.

A. The Channel’s Status as a “New Business”

To evade the Kenford I analysis, Schon-feld argues that the district court should not have characterized the Channel as a “new business.” He emphasizes that he and the Hilliard brothers were experienced cable channel operators and BBC news programming has been distributed around the world for many years. Accordingly, he claims that the Channel is more analogous to the introduction in Ashland of a new but tested investment strategy by an existing financial management corporation with an extensive customer base. This argument is unpersuasive.

It is undisputed that the Channel’s operating entity never saw the light of day. Had the entity been created, it would have introduced first an existing product, BBC international news programming, and then a new product, the “Americanized” version, into a new market, the United States. In addition, the Channel had no established customer base. The Hilliards had only 66,000 subscribers and Russ Hilliard testified that they were having trouble finding the 500,000 subscribers necessary to preclude the BBC from terminating the March Supply Agreement. Finally, the Hilliards, Schonfeld and the BBC had never jointly operated a cable channel, so there is no historic record of operations from which lost profits could be projected. Therefore, the district court correctly determined that the Channel would have been a new business.

B. Reasonable Certainty of Lost Profits

Schonfeld contends that the existence of lost profits was sufficiently established by the evidence that Cox, Schonfeld, the Hilli-ards and the BBC all believed that profits from the Channel were reasonably certain. However, “[t]he entrepreneur’s ‘cheerful prognostications’ are not enough.” 1 Dobbs Law of Remedies § 3.4. Further, Cox’s profit projections for the international news channel were based on Cox’s own existing cable operations. INN and the non-existent operating entity had no such established operations. Indeed, Schon-feld’s expert, Curtis, admitted that if Cox’s projected costs replaced those in INN’s *174Business Plan, the Channel would be doomed as “a lost venture.”

In addition, the district court properly held that Curtis’s projections based on INN’s Business Plan are legally insufficient. These projections presume that: (1) an operating entity would have been formed and operated for 20 years; (2) an estimated $44 million in pre-launch financing would have been raised; (3) the hypothetical subscriber levels would have been reached; (4) carriage agreements would have been entered; (5) advertisers would have been found at the assumed rates; (6) all projected expenses would have proved correct; (7) marketing costs would have remained constant and expenditures would have been sufficient to attract and maintain subscriber interest; and (8) the type and amount of equity interest held by each investor, including INN, would have been determined in the manner alleged by Schonfeld. Curtis was unaware that some cable owners are paid to carry a channel and admitted that, if the Channel’s operating entity had to pay for carriage, it would not survive.

Subject as they are to the changing whims and artistic tastes of the general public, claims for profits lost in unsuccessful entertainment ventures have received a chilly reception in the New York courts. See Kenford I, 67 N.Y.2d at 262-63, 493 N.E.2d at 236, 502 N.Y.S.2d at 133; Melvin Simensky, Determining Damages for Breach of Entertainment Agreements, 8 Ent. and Sports Law. 1, 12-13 (1990) (collecting cases). Curtis believes he adjusted his profit figures to take such factors into account by providing for a 25% variance on the projected cash flows of the operating entity. In his deposition, he stated that he chose the 25% variance based on his experience with the cable industry. However, Curtis failed to establish that this variance would adequately account for any inaccuracies in the revenue and expense assumptions discussed above as well as any changes in consumer demand for British-style news reporting.

Indeed, Curtis failed to account for the effects of any general market risks on the Channel’s probability of success. These risks include: (1) the entry of competitors; (2) technological developments; (3) regulatory changes; or (4) general market movements. As the district court correctly noted, “[f]ailure to control for adverse market conditions allows the false inference that plaintiffs venture was an assured success.” Schonfeld, 62 F.Supp.2d at 1074. Therefore, the court properly held that Schon-feld failed to establish a foundation for the existence of lost profits.1

In addition, Grimes’s testimony regarding likely profits based on his comparisons to existing cable channels was properly rejected. It rested on a foundation of sand. Schonfeld failed to establish the high degree of correlation between INN or the non-existent operating entity and the proffered firms (in terms of, inter alia, investors, management and cost structures) upon which the probative quality of this evidence depends. See, e.g., S & K Sales Co. v. Nike, Inc., 816 F.2d 843, 852 (2d Cir.1987) (evidence concerning parent corporation admissible with respect to subsidiary); 3 Dobbs Law of Remedies at § 13.4(3) (profits of another entity are relevant if “plaintiffs business bears a close comparison” to the proposed business, “the products or services involved are standardized,” and the profits “do not depend heavily on local or personal management skills”).

Schonfeld contends that the district court ignored the “wrongdoer rule” which Schonfeld believes required that the burden of uncertainty as to the amount of damages be shifted to the Hilliards. The “wrongdoer rule,” however, is not that broad. It provides that, “when the existence of damage is certain, and the only uncertainty is as to its amount, ... the *175burden of uncertainty as to the amount of damage is upon the wrongdoer.” Contemporary Mission, Inc. v. Famous Music Corp., 557 F.2d 918, 926 (2d Cir.1977) (emphasis supplied). The rule does not apply here for the simple reason that the existence of lost profit damages cannot be established with the requisite certainty. See id.

C. The Contemplation of the Parties

Finally, Schonfeld maintains that he adduced sufficient evidence to establish that liability for lost profits was within the parties’ contemplation at the time the Hil-liards promised to fund the Interim Agreement. He contends that this case is similar to Travellers Int’l, A.G. v. Trans World Airlines, Inc., 41 F.3d 1570 (2d Cir.1994) where we upheld an award of lost profits when TWA breached its duty of good faith and fair dealing under a joint venture agreement with Travellers to market Travellers’ getaway packages. We disagree.

In Travellers, the plaintiff was seeking to recover profits that would have been realized under the very contract that the defendant was accused of breaching. Further, we noted that TWA had “near exclusive control” over the marketing of the getaway packages and, therefore, the profitability of the business. Id., 41 F.3d at 1578. Thus, when it renewed its contract with Travellers, it “fairly may be supposed to have assumed consciously that lost profits damages would be an appropriate remedy” or at least “to have warranted Travel-lers reasonably to suppose that TWA had assumed such liability.” Id. (internal quotation marks and citation omitted).

Our case is distinguishable in several respects. Schonfeld is not seeking profits that would have accrued under the alleged oral agreement to fund, or even under the Interim Agreement. Rather, Schonfeld wants to recover lost profits that INN or a non-existent operating entity might have received from the operation of the Channel. Further, the profitability of the

Channel was highly uncertain when the Hilliards promised to fund the Interim Agreement. Nor did they exercise “near exclusive control” over the profitability of the venture. In light of “the nature, purpose and particular circumstances of the contract known by the parties,” by orally promising to provide up to $20 million to fund the Interim Agreement, the Hilliards cannot “be supposed to have assumed” liability for approximately $269 million in lost profits that might have been garnered in the future by a non-existent operating entity. Kenford II, 73 N.Y.2d at 319, 537 N.E.2d at 179, 540 N.Y.S.2d at 4.

For all the foregoing reasons, we affirm the district court’s grant of summary judgment dismissing all claims insofar as they seek damages for lost profits.

II. Lost Asset Damages

A. Distinction Between Damages for the Market Value of a Lost Income-Producing Asset and Lost Profits that Could Have Been Derived Therefrom

Schonfeld faults the district court for: (1) failing to distinguish his claims for the market value of the lost supply agreements from his request for lost profits; and (2) dismissing his lost asset claims. Schonfeld is correct.

In an action for breach of contract, a plaintiff may seek two distinct categories of damages: (1) “general” or “market” damages; and (2) “special” or “consequential” damages. See 3 Dan B. Dobbs, Dobbs Law of Remedies § 12.2(3) (1993). A plaintiff is seeking general damages when he tries to recover “the value of the very performance promised.” Id. General damages are sometimes called “market” damages because, when the promised performance is the delivery of goods, such damages are measured by the difference between the contract price and the market *176value of the goods at the time of the breach. See id. at § 12.4.

“Special” or “consequential” damages, on the other hand, seek to compensate a plaintiff for additional losses (other than the value of the promised performance) that are incurred as a result of the defendant’s breach. See id. at § 12.2(3). The type of consequential damages most often sought is lost operating profits of a business. See id. However, lost profits are not the only kind of consequential damages. A defendant’s breach of contract may also cause a plaintiff to lose an asset that was in its possession prior to the breach. See id. at §§ 12.4(1) and 12.4(4). In some instances, the asset lost is an income-producing asset, the fair market value of which may be based, in whole or in part, on a buyer’s projections of what income he could derive from the asset in the future. See Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 496 (2d Cir.1995); Sharma v. Skaarup Ship Mgt. Corp., 916 F.2d 820, 825-26 (2d Cir.1990). Damages seeking to recover the market value for a lost income-producing asset have sometimes been referred to as “hybrid” damages. See 3 Dobbs Law of Remedies at § 12.2(3).

Although lost profits and “hybrid” lost asset damages are both consequential, rather than general, in nature, courts have universally recognized that they are separate and distinct categories of damages. See Indu Craft, 47 F.3d at 496; ESPN, Inc. v. Office of the Comm’r of Baseball, 76 F.Supp.2d 416, 420 n. 3 (S.D.N.Y.1999) (recognizing distinction but rejecting market value theory on ground that it was not introduced until six days before trial).

When the defendant’s conduct results in the loss of an income-producing asset with an ascertainable market value, the most accurate and immediate measure of damages is the market value of the asset at the time of breach — not the lost profits that the asset could have produced in the future. See Sharma, 916 F.2d at 825; 1 Dobbs Law of Remedies at § 3.3(7) (Market value damages are “based on future profits as estimated by potential buyers who form the ‘market’ ” and “reflect the buyer’s discount for the fact that the profits would be postponed and ... uncertain.”).

Applying these principles to Schonfeld’s claims, it is clear that he is seeking two separate and distinct categories of consequential damages: (1) lost profits; and (2) “hybrid” damages for the market value of a lost income-producing asset. As we have already noted, supra, Schonfeld cannot recover the consequential damages he seeks for lost profits. However, this holding in no way impairs his ability to establish his claim for “hybrid” damages seeking the market value of the lost supply agreements. See Indu Craft, 47 F.3d at 495-96 (damages for market value of business are recoverable even though plaintiffs lost profits claim was too speculative).

Relying on Kenford I, the district court held that Schonfeld’s lost asset claims were indistinguishable from DSI’s claims for profits that it could have earned under the stadium management contract. The court’s reliance on Kenford I, however, was misplaced. In Kenford I, DSI never sought to recover damages for the market value of the management agreement— damages that in that instance would have been general damages because the very performance promised was the execution of the agreement. For whatever reason, the only damages sought by DSI were consequential damages for lost profits. Thus, Kenford I does not stand as a bar to Schonfeld’s s.eeking to recover the market value of the supply agreements.

We therefore turn to the proof necessary to recover “hybrid” consequential damages measured by the market value of a lost income-producing asset.

B. Proof Requirements for “Hybrid” Consequential Damages

Some of the confusion in this area is traceable to the law of evidence. The *177same kind of market-value proof is sometimes required to prove general damages as to prove “hybrid” damages for the loss of an income-producing asset. But the two remain analytically distinct. See 3 Dobbs Law of Remedies at §§ 12.2(3), 12.4(7). Like lost profits, “hybrid” damages are one step removed from the naked performance promised by the defendant; and their existence and extent depend on the individual circumstances of the plaintiff. See id. at §§ 12.2(3) and 12.4(5). Therefore, as with all consequential damages, a plaintiff must prove that liability for the loss of the asset was within the contemplation of the parties at the time the contract was made, and the asset’s value should be proven with reasonable certainty. See Indu Craft, 47 F.3d at 496.

The market value of an income-producing asset is inherently less speculative than lost profits because it is determined at a single point in time. It represents what a buyer is willing to pay for the chance to earn the speculative profits. Therefore, it is appropriate to apply these proof requirements more leniently than is the case with proof of lost profits. See 3 Dobbs Law of Remedies at § 12.2(3).

1. Contemplation of the Parties

Although not expressly stated by Russ Hilliard at the time the oral promise to fund the Interim Agreement was made, the Hilliards’ liability for the loss of both the Interim and December Supply Agreements was clearly within the contemplation of all the parties. See Ashland Mgt., 82 N.Y.2d at 403, 624 N.E.2d at 1010, 604 N.Y.S.2d at 915. Indeed, Schonfeld introduced Russ Hilliard's own testimony acknowledging that the BBC would not have agreed to enter into the Interim and December Supply Agreements had the Hilli-ards not promised to fund the Interim Agreement.

Thus, the only remaining issues with respect to Schonfeld’s claims for lost asset damages are whether he can establish both their existence and their amount with reasonable certainty.

2. Certainty of Lost Asset Damages

Schonfeld correctly argues that the district court erred in holding that: (1) he failed to establish that the March and December Supply Agreements were valuable, “recoverable” assets; and (2) even if they were, he could not establish their market values with reasonable certainty.

a. ‘Recoverable” Assets

The goal of awarding damages for the market value of a lost asset is “to make sure the defendant’s tort or contract breach does not leave the plaintiff with assets or net worth less than that to which she is entitled.” 1 Dobbs Law of Remedies at § 3.3(3). Therefore, so long as the lost asset has a determinable market value, a plaintiff may seek to recover that value whether the asset is “tangible or intangible property or almost any kind of contract right.” Id. A supply contract, for instance, is a form of intangible property that has an ascertainable value. See 87 N.Y. Jur.2d Property § 3 (1990); Ambrose v. Commissioner, 15 T.C.M. (CCH) 643 (1956) (valuation of wine supply agreement as a corporate asset); see also Bailey v. Commissioner, 993 F.2d 288 (2d Cir.1993) (valuation of partnership’s contract rights to receive film royalties).

It is undisputed that the March and December Supply Agreements, wherein the BBC granted INN a 20-year exclusive programming license, were INN’s most valuable assets.2 Indeed, Russ Hilli-ard and Bruce Dickenson of Daniels testified that, other than the cash in its bank account, the supply agreements were the only valuable assets that INN possessed. *178Russ Hilliard also conceded that: (1) Schonfeld and the BBC would not have agreed to abandon the March Supply Agreement and enter into the Interim and December Supply Agreements had the Hilliards not promised to fund the Interim Agreement; and (2) INN lost the December Supply Agreement, in part, as a result of the Hilliards’ failure to fund. We conclude that Schonfeld has established the existence of lost asset damages with the requisite certainty.

b. Competent Evidence of Market Value

When a defendant’s breach of contract deprives a plaintiff of an asset, the courts look to compensate the plaintiff for the “market value” of the asset “in contradistinction to any peculiar value the object in-question may have had to the owner.” John D. Calamari and Joseph M. Perillo, The Law of Contracts § 14-12 .(3d ed.1987). Although it is easier to determine an -asset’s market value when it is actively traded on a standardized exchange or commodities market, an asset does not lose its value simply because no such market exists. See id. Admittedly, in such instances, “the determination of a market value involves something of a fiction.” Id.; see American Soc’y of Composers, Authors and Publishers v. Showtime/The Movie Channel, Inc., 912 F.2d 563, 569 (2d Cir.1990) (hereinafter “ASCAP”);. 1 Dobbs Law of Remedies at § 3.5 (market value “is not an existing fact but a legal construct or even a convention”); Charles T. McCormick, Handbook on the Law of Damages § 44 (1935) (without a standardized market, “ ‘market value’ becomes an inference as to the action of an imaginary purchaser.”).

In determining the market value of unique or intangible assets, New York courts have embraced the hypothetical market standard enunciated by the Supreme Court in United States v. Cartwright, 411 U.S. 546, 551, 93 S.Ct. 1713, 36 L.Ed.2d 528 (1973): “The fair market value is the price at which the property would change hands between a willing buyer and a willing seller, neither - being under any compulsion to buy or to sell and both having reasonable knowledge of relevant facts.” See, e.g., Nestle Holdings, Inc. v. Commissioner, 152 F.3d 83, 88 (2d Cir.1998) (trademark); ASCAP, 912 F.2d at 569 (music license); W.T. Grant Co. v. Srogi, 52 N.Y.2d 496, 420 N.E.2d 953, 438 N.Y.S.2d 761 (1981): See also 1 Dobbs Law of Remedies at § 3.5; Calamari and Perillo, The Law of Contracts at § 14-12.

If no prior sales history is available, experts may give their opinion of the asset’s value; and evidence of sales of comparable assets may be introduced. See ASCAP, 912 F.2d at 569-71 (music license); Robbins v. Frank Cooper Assocs., 14 N.Y.2d 913, 200 N.E.2d 860, 252 N.Y.S.2d 318 (1964) (television show format); Central Dover Dev. Corp. v. Town of Dover, 255 A.D.2d 542, 680 N.Y.S.2d 668, 669 (2d Dep’t 1998) (mineral rights); Gilroy v. American Broad. Co., 47 A.D.2d 728, 728, 365 N.Y.S.2d 193, 194 (1st Dep’t 1975) (literary character); 58 N.Y. Jur.2d Evid. § 695 (1986); Calamari and Perillo, The Law of Contracts at § 14-13.

If he is sufficiently qualified, even an asset’s . owner may testify as to its market value. See Ostano Commerzanstalt v. Telewide Sys., Inc., 880 F.2d 642, 647 (2d Cir.1989) (fifty percent shareholder of plaintiff corporation'testified regarding market value damages in action for breach of film licensing contract); Chamberlain v. Dunlop, 126 N.Y. 45, 53, 26 N.E. 966, 967 (1891); Gilroy, 47 A.D.2d at 728, 365 N.Y.S.2d at 194.

If, fortunately, the asset at issue has a sales history, then despite the lack of a traditional market, it is easier for the court to determine the asset’s market value as of the time it was lost. Indeed, it is well-established that a recent sale price for the subject asset, negotiated by parties at arm’s length, is the “best evidence” of its market value. Suitum v. Tahoe Regional Planning Agency, 520 U.S. 725, 741-42, *179117 S.Ct. 1659, 137 L.Ed.2d 980 (1997); accord Silverman v. Commissioner, 538 F.2d 927, 932 n. 7 (2d Cir.1976); W.T. Grant Co., 52 N.Y.2d at 511, 420 N.E.2d at 960, 438 N.Y.S.2d at 768; see also Grill v. United States, 157 Ct.Cl. 804, 303 F.2d 922, 927 (Ct.Cl.1962) (distribution rights to the film “Gone with the Wind”).

Once a plaintiff has produced such evidence, the burden is on the defendant to demonstrate “special circumstances which would negate [the relevance] of a prior arm’s-length purchase price.” Shapiro v. State, 61 A.D.2d 852, 853, 401 N.Y.S.2d 921, 922 (3d Dep’t 1978); see Plaza Hotel Assocs. v. Wellington Assocs., Inc., 37 N.Y.2d 273, 278, 333 N.E.2d 346, 349, 372 N.Y.S.2d 35, 40 (1975) (price agreed upon in arm’s-length transaction “should be accorded significance of the highest rank as a determiner of the value of the property, unless explained away as abnormal in some fashion”).

Although the “sale price rule” is usually seen only in the context of completed transactions, the price at which a party offered to sell the subject property in an unsuccessful transaction nevertheless may be introduced as a party admission when offered against that party. See McAnarney v. Newark Fire Ins. Co., 247 N.Y. 176, 178, 186, 159 N.E. 902, 903, 905 (1928); Hewitt v. State, 37 Misc.2d 634, 637, 235 N.Y.S.2d 481, 484 (Ct.Cl.1962); Petition of Union Free Sch. Dist. No. 3 of Town of Huntington, County of Suffolk, 225 N.Y.S.2d 430, 432 (Sup.Ct.1962), aff'd, 19 A.D.2d 859, 245 N.Y.S.2d 993 (2d Dep’t 1963); 57 N.Y. Jur.2d Evid. §§ 235, 294 (1986); Calamari and Perillo, The Law of Contracts at § 14-13 (applying rule in breach of contract actions).

Furthermore, if the sale price offered as evidence against the defendant by the plaintiff is contained in a contract that was negotiated by the parties at arm’s length, it remains admissible even though the transaction contemplated by the contract was never completed if: (1) the performance promised is not yet due under the contract and the parties still intend to perform, see Garland Properties, Inc. v. Assessor of City of Elmira, 40 A.D.2d 566, 567, 334 N.Y.S.2d 52, 53 (3d Dep’t 1972); or (2) the transaction contemplated under the contract would have occurred but for the defendant’s actions or the interference of a third-party. See Novack v. State, 61 A.D.2d 288, 292, 402 N.Y.S.2d 457, 460 (3d Dep’t 1978); 57 N.Y. Jur.2d Evid. § 232 (1986).

Schonfeld is attempting to establish the market value of INN’s 20-year exclusive BBC programming license which was embodied in both the March and December Supply Agreements. The market for these assets comprises all U.S. cable operators. However, because there is no standardized market or exchange where INN could have sold its contract rights, their market value must be determined by using the hypothetical sale construct. Therefore, the district court erred to the extent that it based its decisions to dismiss claims and to exclude evidence in the court’s belief that: (1) no real market exists for the sale of BBC programming rights; and (2) any alleged value would be “based on a hypothetical resale” of the programming rights to a third party whose valuations would be “highly dependent on the unique characteristics of the hypothetical buyer.” Schonfeld, 62 F.Supp.2d at 1080, 1081.

As evidence of the market value of the supply agreements, Schonfeld relied on the purchase price set in the Cox Agreement. He also introduced expert testimony regarding the value of the 5% equity portion of the purchase price. Schonfeld argues that the district court erred by: (1) holding that the Cox Agreement is insufficient evidence of market value because it was contingent on BBC approval, never final, and based in part on revenue projections that were “unique to Cox;” and (2) excluding the expert testimony offered as to the value established by the Cox Agreement.

*180The Hilliards contend that the district court was right. In addition, they argue that the Cox Agreement should be disregarded as abnormal because the supply agreements contained numerous limitations and obligations INN had to obtain its own investment capital, carriage and advertising agreements and the agreement would expire within one year if certain investment and distribution levels were not reached) with no guaranteed revenue stream. We disagree.

(i) Curtis’s Expert Testimony

We review the district court’s decision to exclude expert testimony for an abuse of discretion, mindful that a mistake of law is automatically such an abuse. See Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 405, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990); Hollander v. American Cyanamid Co., 172 F.3d 192, 202 (2d Cir.1999).

The district court excluded all expert testimony proffered by Schonfeld in support of his claims for lost asset damages on the grounds that it was “irrelevant and speculative.” It was irrelevant, said the court, because Schonfeld had failed to establish that the supply agreements were even “recoverable assets.” This holding, as previously held, was based on an error of law. In addition, Schonfeld is entitled to offer expert testimony as to the value of an income-producing asset, notwithstanding that it rests, in part, on the asset’s ability to produce profits in the future. See ASCAP, 912 F.2d at 569-71; Calamari and Perillo, The Law of Contracts at § 14-13.

Accordingly, we hold that the district court improperly excluded Curtis’s expert testimony with regard to the market value of the supply agreements.

(ii) - Admissibility of the Cox Agreement

We also conclude that the Cox Agreement is competent evidence of the market values of the March and December Supply Agreements. Indeed, using the Cox Agreement as a benchmark, Schonfeld will likely be able to establish their market values with reasonable certainty on remand.

First, it is undisputed that the Cox Agreement was negotiated at arm’s length and that Cox is a well-informed leader in the cable television industry. Although the Hilliards prefer to refer to the agreement reached with Cox as “the Cox offer,” Cox’s offer to purchase INN’s programming rights was memorialized in a contract dated June 2, 1994, that was signed by INN. Further, the Cox Agreement established a price at which Cox agreed to buy and, more importantly, INN agreed to sell INN’s programming rights under the March Supply Agreement. Therefore, Schonfeld offered what we consider “the best evidence” of the market value of the March Supply Agreement. Silverman, 538 F.2d at 932.

It is true that the sale anticipated by the Cox Agreement never occurred and was “subject to the BBC not voicing objections,” the approval of Cox’s board of directors, and the receipt of a non-binding letter of its intent to invest from TCI Cable. However, Schonfeld introduced evidence that the conditions could have been met, and the deal could have gohe through, had the Hilliards agreed to grant an extension of time to work out the few remaining issues. Therefore, the district court should- have “placed considerable weight” on the Cox Agreement as evidence of the value of the March Supply Agreement. Garland Properties, Inc., 40 A.D.2d at 567, 334 N.Y.S.2d at 53 (where satisfaction of contingencies in the contract “created no serious problem,” the court properly “allow[ed] proof of the facts and circumstances of the prospective sale, ... [and placed] considerable weight thereon as evidence of the value of the property”); see also Novack, 61 A.D.2d at 292, 402 N.Y.S.2d at 460; 57 N.Y. Jur.2d Evid. § 232 (1986).

Even if the deal with Cox would not have gone through had the Hilliards *181granted Cox the extension of time, the Cox Agreement clearly establishes the price at which the Hilliards were willing to sell their rights under the March Supply Agreement. Therefore, under the rules of evidence, the price set forth in the Cox Agreement is admissible against the Hilli-ards as a party admission. See McAnarney, 247 N.Y. at 178, 186, 159 N.E. at 903, 905; Hewitt, 37 Misc.2d at 637, 235 N.Y.S.2d at 484; Petition of Union Free Sch. Dist., 225 N.Y.S.2d at 432; 57 N.Y. Jur.2d Evid. §§ 235, 294; Calamari and Perillo, The Law of Contracts at § 14-13.

The Hilliards argue that the purchase price contained in the Cox Agreement should be disregarded as “unique to Cox” because Cox had an established cable network and a pre-existing relationship with the BBC. They contend that the supply agreements would not have the same value to any other purchaser because of their complexity and the substantial limitations and obligations, both financial and promotional, contained therein. This argument is unpersuasive and contrary to New York law.

In Plaza Hotel Assocs., the defendant had previously paid $3.6 million to buy an option to purchase a one-half undivided interest in the land under the Plaza Hotel. In determining the value of the land, the trial court disregarded the price established by the arm’s-length option purchase because “the nature of the transaction and the varied interests of the parties were so unusual that the purchase price could not be relied upon and ... even the option itself was not ordinary.” Id., 37 N.Y.2d at 277-78, 333 N.E.2d at 349-50, 372 N.Y.S.2d at 39-40. Rejecting the argument (identical to that made by the Hilli-ards), the Court of Appeals affirmed the Appellate Division’s reversal of the trial court. The Court held that, “[d]espite the seemingly complicated terms of the agreements, ... we do not share the belief that the complexities were so unusual as to take the case outside the scope of the general rule” that a purchase price set in the course of an arm’s-length transaction is evidence of the highest rank to determine property value. Id. •

Cox’s resources and business position are not determinative of whether the Cox Agreement is competent evidence of the market value of the supply agreements. Any offer is by definition unique to the purchaser because the value of an asset to the purchaser depends on the purchaser’s needs, resources and circumstances. The value placed on an asset by a purchaser, however, does not become evidence of the asset’s market value unless it is also the price at which a reasonably informed seller is willing to sell the asset. Here, Cox “was obviously aware of the conditions and restriction found [in the March Supply Agreement], but nonetheless it agreed upon a price that it thought reasonable under the circumstances.” Id. Further, it was a price at which INN was willing to sell its rights.

Based on the Court of Appeals’ definition of market value, it does not matter that the BBC’s total package deal with Cox (or any other buyer for that matter) would materially differ from the BBC’s deal with INN. Every cable operator has a unique cost structure, revenue flow and relationship with the BBC. Absent an agreed upon sales price, an expert would have to testify as to: (1) all the relevant factors that a cable operator would consider in determining what to offer INN for its contract rights (such as the terms of the purchaser’s possible deal with the BBC); and (2) the factors that INN would consider in deciding at what price to sell. But here, we are fortunate to have an agreed upon sales price which, under New York law, is competent evidence of market value despite the complex nature of the transaction.

Finally, the Hilliards argue that, even if the Cox Agreement is competent evidence of the market value of the March Supply Agreement, it is not admissible to establish the market value of the December Supply Agreement because of material *182differences in the terms. However, evidence of sale prices negotiated at arm’s length for the purchase of “comparable” property is admissible as evidence of the market value of the property at issue. See ASCAP, 912 F.2d at 569-71; Calamari and Perillo, The Law of Contracts at § 14-13.

Moreover, the price set forth in the Cox Agreement was what Cox was willing to pay to ensure that INN could not compete with its BBC news channel for twenty years. The 20-year right to exclusive programming remained constant despite the financial changes in the two agreements. Therefore, the Cox Agreement is still relevant and competent evidence of the market value of the December Supply Agreement. See ASCAP, 912 F.2d at 570-71 (holding that although “courts do not permit psychoanalysis of buyers in comparable transactions to explore the complex mental processes that affected their decision finally to agree on a price,” the district court properly admitted evidence of buyer intent to evaluate the weight to be afforded evidence of comparable sales). The changes in the agreements were not “so drastic that the value of the [December Supply Agreement] could not be ascertained by taking the original purchase price and adjusting it.” Shapiro, 61 A.D.2d at 853, 401 N.Y.S.2d at 922. It is for the jury to decide what effect the change in terms would have had on the Cox Agreement, and Schonfeld should be able to introduce expert testimony on this issue.

c. The Value Established by the Cox Agreement

The only remaining issue is whether the market values for the March and December Supply Agreements can be established with reasonable certainty using the Cox Agreement as a benchmark. Or simply put, what was the purchase price that INN agreed to accept in the Cox Agreement? The agreement provided that the total purchase price would be paid as follows: (1) $700,000 cash upon the signing of the definitive agreements required by the Cox Agreement; (2) $1 million (in annual installments $100,000) paid over ten years; and (3) a 5% equity interest in Cox’s two BBC channels.

The district court held that, “[although the offer proposed an up-front payment, most of INN’s compensation was contingent on the revenue generated by the two proposed channels in the tenth year of operations” and such revenue forecasts are “insufficient to prove damages with reasonable certainty.” Schonfeld, 62 F.Supp.2d at 1080. Ultimately, the district court “excluded as irrelevant and speculative” all expert testimony proffered in support of Schonfeld’s claims for lost asset damages and dismissed all claims insofar as they sought to recover such damages. See id. at 1081. In so holding, the district court applied an improper “all or nothing” approach with respect to the Cox Agreement, ie., if the entire purchase price established by the Cox Agreement cannot be determined with reasonable certainty, then Schonfeld cannot establish the market value of the supply agreements.

However, if he can successfully establish the Hilliards’ liability, Schonfeld is entitled, as a matter of law, to recover market value damages to the extent that they can be proven with reasonable certainty. Further, pursuant to the “wrongdoer rule,” where, as here, “the existence of damage is certain, and the only uncertainty is as to its amount, ... the burden of uncertainty as to the amount of damage is upon the wrongdoer.” Contemporary Mission, Inc., 557 F.2d at 926. Therefore, the burden of uncertainty here is upon the Hilli-ards. See Indu Craft, 47 F.3d at 496 (applying wrongdoer rule to plaintiffs claim for market value of lost ongoing business as consequential damages).

In light of the Cox Agreement, a reasonable jury could find that INN’s programming rights were worth at least $700,000 plus the present value of $1 million paid over ten years, for a total of *183approximately $1.39 million.3 In addition, the Cox Agreement provides sufficient information to calculate a dollar value for the 5% equity portion of the purchase price. Cox retained the right to buy out INN’s 5% interest in the tenth year of operations at a price of 20% of the tenth-year gross revenues of both channels. Incorporated into the Cox Agreement by reference are revenue projections for the news channel made by Cox that were previously forwarded to INN.4 Therefore, on remand, Schonfeld ought to be able to establish, with reasonable certainty, the total amount that Cox was willing to pay and INN was willing to accept for the March Supply Agreement on June 2,1994.

Using the purchase price contained in the Cox Agreement as a benchmark, Schonfeld may introduce expert testimony on remand as to the market values of the March and December Supply Agreements as of the dates on which they were caused to be abandoned or lost. The Hilliards, of course, may introduce evidence with respect to the weight to be accorded the Cox Agreement and may offer independent evidence with respect to the market values of the March and December Supply Agreements.

For the foregoing reasons, the district court erred when it: (1) excluded the expert testimony offered in support of Schonfeld’s claims for market value damages; and (2) granted summary judgment dismissing Schonfeld’s claims insofar as they sought to recover the market value of the December Supply Agreement. In addition, to the extent that Schonfeld seeks to recover the market value of the March Supply Agreement in connection with his fraud claim, that claim was improperly limited to $15,000. “Under New York law, the measure of damages for fraud is governed by the ‘out-of-pocket’ rule which permits recovery for a plaintiffs reliance interest,” including damages incurred by “passing up other business opportunities.” Fort Howard Paper Co. v. William D. Witter, Inc., 787 F.2d 784, 793 n. 6 (2d Cir.1986) (internal quotation marks and citations omitted). Therefore, Schonfeld may seek to recover the market value of the March Supply Agreement which INN abandoned in reliance on the Hilliards’ promises. See id., 787 F.2d at 793 (noting that fraud claims are properly alleged, and are not merely contract claims in disguise when “the injury alleged [i]s the detriment actually suffered by the plaintiff rather than the value of what defendant promised”).

III. Punitive Damages

Schonfeld argues that the district court erred by dismissing his claims for punitive damages in connection with his fraud and breach of fiduciary duty causes of action on the ground that Schonfeld failed to establish that the defendant’s conduct caused public harm. Even if Schonfeld is correct regarding the public harm requirement, we affirm the district court’s dismissal of Schonfeld’s claims insofar as they seek punitive damages.

In Rocanova v. Equitable Life Assurance Soc’y of the United States, 83 N.Y.2d 603, 634 N.E.2d 940, 612 N.Y.S.2d 339 (1994), the Court of Appeals held that, in order to recover punitive damages for breach of contract, a plaintiff must establish that the defendant’s conduct: (1) is actionable as an independent tort; (2) was sufficiently egregious; and (3) was directed not only against the plaintiff, but was part of a pattern of behavior aimed at the public generally. See id., 83 N.Y.2d at *184613, 634 N.E.2d at 944, 612 N.Y.S.2d at 343. The Court of Appeals has since suggested that these requirements are applicable whenever an action “has its genesis in the contractual relationship between the parties.” New York Univ. v. Continental Ins. Co., 87 N.Y.2d 308, 316, 662 N.E.2d 763, 767, 639 N.Y.S.2d 283, 287 (1995).

Relying on pre-Rocanova cases, Sehon-feld argues that the public harm requirement is not applicable to claims for fraud or breach of fiduciary duty. See, e.g., Giblin v. Murphy, 73 N.Y.2d 769, 536 N.Y.S.2d 54, 532 N.E.2d 1282 (1988) (punitive damages properly awarded in action for breach of contract and fraud despite absence of public harm where defendant recklessly and repeatedly breached their fiduciary duties and conducted an “out- and-out fraud”); Action S.A. v. Marc Rich & Co., 951 F.2d 504, 509 (2d Cir.1991) (holding in action for fraud, breach of fiduciary duty, breach of contract and unjust enrichment that, “[ujnder New York law, punitive damages are appropriate in cases involving gross, wanton or willful fraud or other morally culpable conduct ... [which] need not be directed at the general public”) (internal quotation marks and citations omitted).

We need not decide whether the “public harm” requirement set forth in Rocanova applies to claims for fraud, or breach of fiduciary duty, however, because we agree with the district court that the defendants’ alleged conduct was not “sufficiently egregious” or “willful” to warrant the imposition of exemplary damages even under the standards applicable to ordinary fraud claims. Nor is there evidence of self-dealing or malicious conduct. Indeed, as a result of the dissolution of the Interim and December Supply Agreements, the Hilliards collectively lost almost $800,000. Accordingly, we affirm the district court’s dismissal of Schonfeld’s claims for fraud and breach of fiduciary duty insofar as they seek punitive damages.

IV. Defendants’ Additional Arguments on Appeal

The Hilliards argue that we should nevertheless affirm the district court’s grant of summary judgment because the oral promise to fund is unenforceable. The bases for this contention are twofold: (1) the alleged promise was so indefinite that there could not have been a “meeting of the minds;” and (2) the promise is not in writing as is necessary to modify the Shareholders’ Agreement and is also required by the New York Statute of Frauds.

Both of these grounds were briefed by the parties below, but the district court elected not to address them. Although we are empowered to affirm a district court’s decision on a theory not considered below, it is our distinctly preferred practice to remand such issues for consideration by the district court in the first instance. This is particularly appropriate when, as here, such theories have been briefed and argued only cursorily in this Court. See Thompson v. County of Franklin, 15 F.3d 245, 253 (2d Cir.1994). We therefore remand to allow the district court to consider these arguments in the first instance.

CONCLUSION

We have considered the parties’ remaining contentions and find them to be without merit. Accordingly, we AFFIRM the grant of the appellees’ motion for summary judgment dismissing appellant’s claims insofar as they seek damages for lost profits and punitive damages, REVERSE the grant of the appellees’ motion for summary judgment dismissing appellant’s claims insofar as they seek damages for the market value of the supply agreements and limiting appellant’s fraud claim to $15,000, VACATE the judgment entered below dismissing Counts II through X of the Amended Complaint and RE*185MAND for further proceedings consistent with this opinion.

OPINION OF THE COURT

PER CURIAM.

This appeal from a district court’s award of damages for breach of warranty in a diversity case tried under New Jersey law presents two questions: whether the district court’s computation of damages under N.J.Stat.Ann. § 12A:2 — 714(2) was clearly erroneous, and whether the district court abused its discretion in supplementing the damage award with pre-judgment interest. We answer both questions in the negative and, therefore, we will affirm.

Plaintiff-appellee Chatios Systems, Inc., initiated this action in the Superior Court of New Jersey, alleging, inter alia, breach of warranty regarding an NCR 399/656 computer system it had acquired from defendant National Cash Register Corp. The case was removed under 28 U.S.C. § 1441(a) to the United States District Court for the District of New Jersey. Following a non-jury trial, the district court determined that defendant was liable for breach of warranty and awarded $57,152.76 damages for breach of warranty and consequential damages in the amount of $63,558.16. Chatlos Systems, Inc. v. National Cash Register Corp., 479 F.Supp. 738 (D.N.J.1979), aff’d in part, remanded in part, 635 F.2d 1081 (3d Cir. 1980). Defendant appealed and this court affirmed the district court’s findings of liability, set aside the award of consequential damages, and remanded for a recalculation of damages for breach of warranty. Chatlos Systems, Inc. v. National Cash Register Corp., 635 F.2d 1081 (3d Cir. 1980). On remand, applying the “benefit of the bargain” formula of N.J.Stat.Ann. § 12A:2-714(2) (Uniform Commercial Code § 2-714(2)),1 the district court determined the damages to be $201,826.50,2 to which it added an award of pre-judgment interest. Defendant now appeals from these damage determinations, contending that the district court erred in failing to recognize the $46,-*1306020 contract price of the delivered NCR computer system as the fair market value of the goods as warranted, and that the award of damages is without support in the evidence presented. Appellant also contests the award of pre-judgment interest.

Waiving the opportunity to submit additional evidence as to value on the remand which we directed, appellant chose to rely on the record of the original trial and submitted no expert testimony on the market value of a computer which would have performed the functions NCR had warranted. Notwithstanding our previous holding that contract price was not necessarily the same as market value, 635 F.2d at 1088, appellant faults the district judge for rejecting its contention that the contract price for the NCR 399/656 was the only competent record evidence of the value of the system as warranted. The district court relied instead on the testimony of plaintiff-appel-lee’s expert, Dick Brandon, who, without estimating the value of an NCR model 399/656, presented his estimate of the value of a computer system that would perform all of the functions that the NCR 399/656 had been warranted to perform. Brandon did not limit his estimate to equipment of any one manufacturer; he testified regarding manufacturers who could have made systems that would perform the functions that appellant had warranted the NCR 399/656 could perform. He acknowledged that the systems about which he testified were not in the same price range as the NCR 399/656. Appellant likens this testimony to substituting a Rolls Royce for a Ford, and concludes that the district court’s recomputed damage award was therefore clearly contrary to the evidence of fair market value — which in NCR’s view is the contract price itself.

Appellee did not order, nor was it promised, merely a specific NCR computer model, but an NCR computer system with specified capabilities. The correct measure of damages, under N.J.Stat.Ann. § 12A:2— 714(2), is the difference between the fair market value of the goods accepted and the value they would have had if they had been as warranted. Award of that sum is not confined to instances where there has been an increase in value between date of ordering and date of delivery. It may also include the benefit of a contract price which, for whatever reason quoted, was particularly favorable for the customer. Evidence of the contract price may be relevant to the issue of fair market value, but it is not controlling. Mulvaney v. Tri State Truck & Auto Body, Inc., 70 Wis.2d 760, 767, 235 N.W.2d 460, 465 (1975). Appellant limited its fair market value analysis to the contract price of the computer model it actually delivered.3 Appellee developed evidence of the worth of a computer with the capabilities promised by NCR, and the trial court properly credited the evidence.4

*1307Appellee was aided, moreover, by the testimony of Frank Hicks, NCR’s programmer, who said that he told his company’s officials that the “current software was not sufficient in order to deliver the program that the customer [Chatios] required. They would have to be rewritten or a different system would have to be given to the customer.” Appendix to Brief for Appellee at 2.68. Hicks recommended that Chatios be given an NCR 8200 but was told, “that will not be done.” Id. at 2.69. Gerald Greenstein, another NCR witness, admitted that the 8200 series was two levels above the 399 in sophistication and price. Id. at 14.30. This testimony supported Brandon’s statement that the price of the hardware needed to perform Chatios’ requirements would be in the $100,000 to $150,000 range.

Essentially, then, the trial judge was confronted with the conflicting value estimates submitted by the parties. Chatios’ expert’s estimates were corroborated to some extent by NCR’s supporters. NCR, on the other hand, chose to rely on contract price. Credibility determinations had to be made by the district judge. Although we might have come to a different conclusion on the value of the equipment as warranted had we been sitting as trial judges, we are not free to make our own credibility and factual findings. We may reverse the district court only if its factual determinations were clearly erroneous. Krasnov v. Dinan, 465 F.2d 1298 (3d Cir. 1972).5

Upon reviewing the evidence of record, therefore, we conclude that the computation of damages for breach of warranty was not clearly erroneous. We hold also that the district court acted within its discretion in awarding pre-judgment interest, Chatlos Systems, Inc. v. National Cash Register Corp., 635 F.2d at 1088.

The judgment of the district court will be affirmed.

ROSENN, Circuit Judge,

dissenting.

The primary question in this appeal involves the application of Article 2 of the Uniform Commercial Code as adopted by New Jersey in N.J.S.A. 12A:2-101 et seq. (1962) to the measure of damages for breach of warranty in the sale of a computer system. I respectfully dissent because I believe there is no probative evidence to support the district court’s award of damages for the breach of warranty in a sum amounting to almost five times the purchase price of the goods. The measure of damages also has been misapplied and this could have a significant effect in the marketplace, especially for the unique and burgeoning computer industry.1

In July 1974, National Cash Register Corporation (NCR) sold Chatios Systems, Inc. (Chatios), a NCR 399/656 disc computer system (NCR 399) for $46,020 (exclusive of 5 percent sales tax of $1,987.50). The price and system included:

The computer (hardware)........ $40,165.00

Software (consisting of 6 computer programs)2 ................. 5,855.00

$46,020.00

NCR delivered the disc computer to Chat-ios in December 1974 and in March 1975 the payroll program became operational. By March of the following year, however, NCR was still unsuccessful in installing an operational order entry program and inventory deletion program. Moreover, on August 31, 1976, Chatios experienced problems with the payroll program. On that same day and the day following NCR installed an *1308operational state income tax program, but on September 1, 1976, Chatios demanded termination of the lease3 and removal of the computer.

When this case was previously before us, we upheld the district court’s liability decision but remanded for a reassessment of damages, instructing the court that under the purchase contract and the law consequential damages could not be awarded. Consequential damages, therefore, are no longer an issue here.4

On remand, the district court, on the basis of the previous record made in the case, fixed the fair market value of the NCR 399 as warranted at the time of its acceptance in August 1975 at $207,826.50. It reached that figure by valuing the hardware at $131,250.00 and the software at $76,575.50, for a total of $207,826.50. The court then determined that, the present value of the computer hardware, which Chatios retained, was $6,000. Putting no value on the accepted payroll program, the court deducted the $6,000 and arrived at an award of $201,-826.50 plus pre-judgment interest at the rate of 8 percent per annum from August 1975.

Chatios contends before this court, as it had before the district court on remand, that under its benefit of the bargain theory the fair market value of the goods as warranted was several times the purchase price of $46,020. As the purchaser, Chatios had the burden of proving the extent of the loss. Council Brothers, Inc. v. Ray Burner Co., 473 F.2d 400, 408 (5th Cir. 1973). In remanding to the district court for a reassessment of the damages, we did not reject the contract price for the goods sold as the proper valuation of the computer as warranted. We merely corrected the district court’s misconception that the language of the New Jersey statute precluded consideration of fair market value. We held that “value” in section 2-714(2) must mean fair market value at the time and place of acceptance.5 We pointed out:

It may be assumed that in many cases fair market value and contract price are the same, and therefore, if a party wishes to show a difference between the two he should produce evidence to that effect.

Chatlos Systems, Inc. v. National Cash Register Corp., 635 F.2d 1081, 1088 (3d Cir. 1980) (emphasis added) on remand, No. 77-2548 (D.N.J., filed Mar. 12,1981). Thus, the sole issue before us now is whether the district court erred in fixing the fair market value of the computer system as warranted at the time of the acceptance in August 1975 at $207,826.50.

II.

A.

I believe that the district court committed legal error. The majority conclude that the standard of review of the district court’s determination of the fair market value of the goods for the purpose of awarding damages is whether the trial judge’s determination of market value is clearly erroneous. I disagree. Had the court merely miscalculated the amount of damages, I might agree with the majority’s standard, for then our concern would be with basic facts. Here, however, no evidence was introduced as to the market value of the specific goods purchased and accepted had the system conformed to the *1309warranty. Thus, the matter before us is one of legal error, and our standard of review is plenary. But even under the standard applied by the majority, the district court should be reversed because its determination of market value is not supported by probative evidence.

There are a number of major flaws in the plaintiff’s attempt to prove damages in excess of the contract price. I commence with an analysis of plaintiff’s basic theory. Chatios presented its case under a theory that although, as a sophisticated purchaser, it bargained for several months before arriving at a decision on the computer system it required and the price of $46,020, it is entitled, because of the breach of warranty, to damages predicated on a considerably more expensive system. Stated another way, even if it bargained for a cheap system, i.e., one whose low cost reflects its inferior quality, because that system did not perform as bargained for, it is now entitled to damages measured by the value of a system which, although capable of performing the identical functions as the NCR 399, is of far superior quality and accordingly more expensive.

The statutory measure of damages for breach of warranty specifically provides that the measure is the difference at the time and place of acceptance between the value “of the goods accepted” and the “value they would have had if they had been as warranted.”6 The focus of the statute is upon “the goods accepted” — not other hypothetical goods which may perform equivalent functions. “Moreover, the value to be considered is the reasonable market value of the goods delivered, not the value of the goods to a particular purchaser or for a particular purpose.” KLPR-TV, Inc. v. Visual Electronics Corp., 465 F.2d 1382, 1387 (8th Cir. 1972) (emphasis added). The court, however, arrived at value on the basis of a hypothetical construction of a system as of December 1978 by the plaintiff’s expert, Brandon. The court reached its value by working backward from Brandon’s figures, adjusting for inflation.

In presenting its case Chatios developed its expert testimony as though it were seeking “cover” damages — the cost for the replacement of the computer system under section 2-712 of the statute. First, “cover” damages are obviously inappropriate here because both the district court and this court in its earlier decision held that the measure of damages is governed by section 2-714(2).7 Furthermore, Chatios did not “cover” in this case and, although there was testimony that it would use an IBM Series 1 mini-computer to perform the NCR 399 functions, the president of Chatios personally testified that the IBM “wasn’t purchased with intent to replace the 399 system at the time of purchase.” Second, Chatios gave no evidence as to the cost of the IBM Series 1 computer system. However, under the applicable section of the statute, 2-714, the measure of damages is specifically confined to “the difference between the value of the goods accepted and the value they would have had if they had been as warranted” and does not include “the difference between the cost of cover and the contract price” as provided by section 2-712.

Although NCR warranted performance, the failure of its equipment to perform, absent any evidence of the value of any NCR 399 system on which to base fair market value,8 does not permit a market value *1310based on systems wholly unrelated to the goods sold. Yet, instead of addressing the fair market value of the NCR 399 had it been as warranted, Brandon addressed the fair market value of another system that he concocted by drawing on elements from other major computer systems manufactured by companies such as IBM, Burroughs, and Honeywell, which he considered would perform “functions identical to those contracted for” by Chatios. He conceded that the systems were “[pjerhaps not within the same range of dollars that the bargain was involved with” and he did not identify specific packages' of software. Brandon had no difficulty in arriving at the fair market value of the inoperable NCR equipment but instead of fixing a value on the system had it been operable attempted to fashion a hypothetical system on which he placed a value. The district court, in turn, erroneously adopted that value as the fair market value for an operable NCR 399 system. NCR rightly contends that the “comparable” systems on which Brandon drew were substitute goods of greater technological power and capability and not acceptable in determining damages for breach of warranty under section 2-714. Furthermore, Brandon’s hypothetical system did not exist and its valuation was largely speculation.

B.

A review of Brandon’s testimony reveals its legal inadequacy for establishing the market value of the system Chatios purchased from NCR. Brandon never testified to the fair market value which the NCR 399 system would have had had it met the warranty at the time of acceptance. He was not even asked the question. His testimony with respect to the programming or software 9 was developed along the following line:

Q: Mr. Brandon, based upon your knowledge and experience in the field, are you aware of any other vendors in the computer industry ■ who would have been able to supply a system, that is, hardware and software, which would provide the functions that were contemplated by the arrangement between NCR and Chatios Systems.

******

A: Yes, there are a number of other vendors who would have made or • could have made comparable systems available whose functions would be identical to those desired by Chatios or required by Chatios.

******

Q: What, if you know, would have been the price of acquiring that similar system in September of 1976?

******

A: I made some estimates of cost of acquiring seven separate application components, the seven to which I have earlier testified. I made those estimates in December, 1978, at which time I estimated the cost to be approximately, in the aggregate, approximately $102,000.

His estimate of the cost of the hardware in 1976 was “in the range of $100,000 to $150,-000.”

Not only did Brandon not testify in terms of the value of the NCR 399, but he spoke vaguely of “a general estimate ... as to what the cost might be of, let’s say, developing a payroll or purchasing a payroll package today and installing it at Chatios.” He explained that what he would do, without identifying specific packages, would be to obtain price lists “from the foremost organizations selling packages in our field, in that area,” organizations such as Management Science of America in Atlanta, and take their prices for specific packages. When asked what packages he would use for this system, he replied, “I would shop around, frankly.” Speculating, he testified, “I think that I would go to two or three *1311alternatives in terms of obtaining packages.” 10 When asked to address himself to the packages that he would provide for this system, he acknowledged that the programs he had in mind were only available “[for] certain types of machines.” For example, he conceded that these programs would not be available for the Series 1 IBM mini-computer, “with the possible exception of payroll.”

Thus, the shortcomings in Brandon’s testimony defy common sense and the realities of the marketplace. First, ordinarily, the best evidence of fair market value is what a willing purchaser would pay in cash to a willing seller. Vollmer v. City of Philadelphia, 350 Pa. 223, 38 A.2d 266, 269 (1944) (quoting Hudson Coal Company’s Appeal, 327 Pa. 247, 251, 193 A. 8, 10 (1937)); Yara Engineering Corp. v. City of Newark, 136 N.J.Eq. 453, 42 A.2d 632, 638 (N.J. Ch. 1945). In the instant case we have clearly “not ... an unsophisticated consumer,” Chatlos Systems v. National Cash Register Corp., 479 F.Supp. 738, 748 (D.N.J.1979), modified, 635 F.2d 1081 (3rd Cir. 1980), on remand, No. 77-2548 (D.N.J., filed Mar. 12, 1981), who for a considerable period of time negotiated and bargained with an experienced designer and vendor of computer systems. The price they agreed upon for an operable system would ordinarily be the best evidence of its value. The testimony does not present us with the situation referred to in our previous decision, where “the value of the goods rises between the time that the contract is executed and the time of acceptance,” in which event the buyer is entitled to the benefit of his bargain. Chatlos, supra, 635 F.2d at 1088. On the contrary, Chatios here relies on an expert who has indulged in the widest kind of speculation. Based on this testimony, Chatios asserts in effect that a multi-national sophisticated vendor of computer equipment, despite months of negotiation, incredibly agreed to sell an operable computer system for $46,020 when, in fact, it had a fair market value of $207,000.

Second, expert opinion may, of course, be utilized to prove market value but it must be reasonably grounded. Brandon did not testify to the fair market value “of the goods accepted” had they met the warranty. Instead, he testified about a hypothetical system that he mentally fashioned. He ignored the realistic cost advantage in purchasing a unified system as contrasted with the “cost of acquiring seven separate application components” from various vendors.

Third, in arriving at his figure of $102,-000 for the software, Brandon improperly included the time and cost of training the customer’s personnel associated with the installation of the system. In a deposition prior to trial, Brandon testified that his valuation of the software included the time necessary to train Chatios’ personnel in the use of the system. On direct examination at trial, he testified that the $102,000 value fixed for software and programming did *1312not include the time and cost necessary to train Chatios’ personnel in the use of the system, indicating that the cost of training a customer and his personnel is “definitely” not included in the price of programming and software. When confronted with his prior inconsistent deposition, he conceded that in his estimate of $102,000 “we included the Chatios time.”

Fourth, the record contains testimony which appears undisputed that computer equipment falls into one of several tiers, depending upon the degree of sophistication. The more sophisticated equipment has the capability of performing the functions of the least sophisticated equipment, but the less sophisticated equipment cannot perform all of the functions of those in higher levels. The price of the more technologically advanced equipment is obviously greater.

It is undisputed that in September 1976 there were vendors of computer equipment of the same general size as the NCR 399/656 with disc in the price range of $35,000 to $40,000 capable of providing the same programs as those required by Chat-ios, including IBM, Phillips, and Burroughs. They were the very companies who competed for the sale of the computer in 1974 in the same price range. On the other hand, Chatios’ requirements could also be satisfied by computers available at “three levels higher in price and sophistication than the 399 disc.” Each level higher would mean more sophistication, greater capabilities, and more memory. Greenstein, NCR’s expert, testified without contradiction that equipment of Burroughs, IBM, and other vendors in the price range of $100,000 to $150,000, capable of performing Chatios’ requirements, was not comparable to the 399 because it was three levels higher. Such equipment was more comparable to the NCR 8400 series.11

Fifth, when it came to the valuation of the hardware, Brandon did not offer an opinion as to the market value of the hypothetical system he was proposing. Instead, he offered a wide ranging estimate of $100,000 to $150,000 for a hypothetical computer that would meet Chatios’ programming requirements. The range in itself suggests the speculation in which he indulged.

III.

The purpose of the N.J.S.A. 12A:2-714 is to put the buyer in the same position he would have been in if there had been no breach. See Uniform Commercial Code 1— 106(1). The remedies for a breach of warranty were intended to compensate the buyer for his loss; they were not intended to give the purchaser a windfall or treasure trove. The buyer may not receive more than it bargained for; it may not obtain the value of a superior computer system which it did not purchase even though such a system can perform all of the functions the inferior system was designed to serve. Thus, in Meyers v. Antone, 227 A.2d 56 (D.C.App.1967), the court held that where the buyers contracted for a properly functioning used oil heating system which proved defective, they were free to substitute a gas system (which they did), change over to forced air heating, or even experiment with a solar heating plant. “They could not, however, recover the cost of such systems. They contracted for a used oil system that would function properly, and can neither receive more than they bargained for nor be put in a better position than they would have been had the contract been fully performed. Id. at 59 (citations omitted).

This court, in directing consideration of fair market value as the starting point in deciding damages noted Chatios’ contention that exclusive use of contract price deprives the dissatisfied buyer of the “benefit of his bargain.” We accepted the concept of “benefit of the bargain” and explicated our understanding of the concept as follows:

*1313If the value of the goods rises between the time the contract is executed and the time of acceptance, the buyer should not lose the advantage of a favorable contract price because of the seller’s breach of warranty. Conversely, if the value drops, the seller is entitled to the resulting lower computation.

Chatlos, supra, 635 F.2d at 1088. Ironically, this example of benefit of the bargain is actually based on contract price. If on the date of acceptance the fair market value of the goods has risen or declined from the contract price, that variation must be taken into account in awarding damages. But here plaintiff’s market value figures, accepted by the district court on remand, have no connection whatsoever with the contract price.

Although it may be that the “benefit of the bargain” concept is applicable to situations involving other than periodic fluctuations in market prices, the cases cited by Chatios stand only for the premise that the proved market value of the goods in question must be accepted. Thus, in Melody Home Manufacturing Co. v. Morrison, 502 S.W.2d 196 (Tex.Civ.App.1973), where $5,300 was the price of a mobile home, the measure of damages for breach of warranty under U.C.C. § 2-714(2) was the difference between $2,000, the value of the delivered home, and $6,000 the proved market value of the particular home. In Miles v. Lyons, 42 Mass.App.Dec. 77, 6 U.C.C.Rep. 659 (Dist.Ct.1969), the defendants (Lyons) sued for conversion of furniture, impleaded Anita Miles, former wife of the plaintiff, from whom they had purchased the furniture. Mrs. Miles had sold it to the Lyons for $100, falsely asserting it belonged to her. The justice found for the plaintiff in the amount of $275, the value of the furniture at the time of conversion, but he found for the Lyons as third-party plaintiffs for $100. On appeal, the finding of $100 was vacated and judgment entered for $275, the loss resulting from the seller’s breach of warranty of title. The Lyons were entitled, the court held, to the benefit of their bargain and the measure of damages under section 2-714. The bargain consisted of the value of the specific furniture they purchased— not other hypothetical furniture constructed in superior fashion or of superior materials.

Even if we were to accept plaintiff’s theory that the value of other systems may be used to establish the value of the specific computer system purchased, the cases cited by Chatios to support its theory are distinguishable. In Giant Food v. Jack I. Bender & Sons, 399 A.2d 1293 (D.C.App.1979), when a seller, after three years, replaced carpet under warranty with new carpet of higher price, the buyer refused to pay the excess cost. The court agreed that the value of the replacement carpet represented the buyer’s damages. However, the appellate court expressly noted that “[t]he trial court implicitly found that the replacement was a reasonable one — i.e., it was of substantially the same style, goods and character as that for which [the buyer] had originally contracted.” Id. at 1306 n.26 (emphasis added). In the instant case, there was no testimony that the hypothetical system — apart from its ability to perform identical functions— was otherwise the same. Furthermore, as distinguished from this case, the goods were actually replaced by the seller. In Huyett-Smith Manufacturing Co. v. Gray, 129 N.C. 438, 40 S.E. 178 (1901), a pre-Code case, the vendor of a kiln represented that it had a capacity in excess of any kiln on the market. In measuring the damages claimed by the purchaser the court would not fix damages in excess of the contract by looking to a non-existent kiln stating that the purchaser “is not entitled to speculative damages for an ideal machine which was not on the market.” Id. at 179.

Because Brandon’s testimony does not support Chatios’ grossly extravagant claim of the fair market value of the NCR 399 at the time of its acceptance, the only evidence of the market value at the time is the price negotiated by the parties for the NCR computer system as warranted.

There are- many eases in which the goods will be irreparable or not replaceable and therefore the costs of repair or replacement can not serve as a yardstick *1314of the buyer’s damages. . . . When fair market value cannot be easily determined . . . the purchase price may turn out to be strong evidence of the value of the goods as warranted.

J. White & R. Summers, Uniform Commercial Code § 10-2, at 380 (2d ed. 1980) (footnotes omitted).12 Accord Auto-Teria, Inc. v. Ahern, 170 Ind.App. 84, 352 N.E.2d 774, 783 (1976). In Long v. Quality Mobile Home Brokers, Inc., 271 S.C. 482, 248 S.E.2d 311 (1978), the court applied section 2-714(2) of the U.C.C. to arrive at a measure of damages for breach of warranty. Noting that “value” as used in that section meant “fair market value,” it asserted that “the cash price paid for goods is prima facie the value of the goods as warranted.” Id. 248 S.E.2d at 312. White & Summers, supra, at 382, also remind us that “the value of goods as warranted will seldom be in dispute, for the contract price will be a powerful measure of that end of the formula.” (Emphasis added; footnote omitted.)

Thus, where there is no proof that market value of the goods differs from the contract price, the contract price will govern, cf. Gulf Chemical & Metallurgical Corp. v. Sylvan Chemical Corp., 122 N.J.Super. 499, 505, 300 A.2d 878, 882 (Law Div.), aff’d, 126 N.J.Super. 261, 314 A.2d 73 (App.Div.1973), certification denied, 64 N.J. 507, 317 A.2d 720 (1974) (party not entitled under N.J.S.A. 12A:2-713(1) to damages based on the benefit of his bargain, i.e., the difference between the contract price and the market price when “there is no proof . . . that the market price for the goods purchased was any different than the price contracted for .... ”), and in this case that amounts to $46,020. Chatios has retained the system hardware and the district court fixed its present value in the open market at $6,000. The court properly deducted this sum from the damages awarded.

IV.

Chatios purchased the NCR payroll program and acknowledged at trial that the program operated fully and satisfactorily beginning February or March 1975 until October 1978 when it discontinued its use. The district court assigned no value to it because there was no evidence of fair market value. However, the law is clear that without evidence of a value other than contract price, that price should be accepted as the fair market value of the payroll program. The parties agreed on a contract price of $1,000 and that sum should be deducted from the measure of damages.

V.

NCR complains that the award of prejudgment interest is impermissible under New Jersey law. On remand, the district court awarded prejudgment interest from August 1975 but offered no explanation for so doing. Congress has not provided for prejudgment interest but has provided that interest on a money judgment recovered in a district court in a civil case shall be allowed and “shall be calculated from the date of the entry of the judgment, at the rate allowed by State law.” 28 U.S.C.A. § 1961 (1959). See also Fed.R.App.P. 37.

In Buono Sales, Inc. v. Chrysler Motors Corp., 449 F.2d 715 (3d Cir. 1971), the plaintiff also claimed that it was entitled to prejudgment interest under New Jersey law for a breach of contract. In writing for this court, Chief Judge Seitz stated:

Under New Jersey law, a successful plaintiff in an action for breach of contract is not entitled to prejudgment inter*1315est as a matter of right where damages are unliquidated. Indeed, the rule appears to be that, unless considerations of justice and fair dealing clearly demand a different result, “interest should not be allowed where the damages are unliquidated and not capable of ascertainment by mere computation, or where a serious and substantial controversy exists as to the amount due under a contract.” Jardine Estates, Inc. v. Donna Brook Corp., 42 N.J.Super. 332, 341, 126 A.2d 372, 377 (App.Div.1956); ...

Id. at 723. This case too involves a breach of contract and unliquidated damages. In light of its history and the nature of the very appeal, there can be no doubt that a substantial controversy existed over liability and damages. The trial judge made no finding that considerations of justice and fair dealing demanded an award of prejudgment interest. On the contrary, the judge found that plaintiff had not proved fraud on NCR’s part and found that it had acted fairly and in good faith with Chatios during the entire course of their dealings. When we previously considered the issue of liability, we concluded “[n]o evidence of wrongful intent on the part of NCR was found, nor did the plaintiff prove fraudulent misrepresentation.” Chatlos supra, 635 F.2d at 1084. We also stated:

[I]t is worth mentioning that even though unsuccessful in correcting the problems within an appropriate time, NCR continued in its efforts. Indeed, on the date of termination NCR was still actively working on the system at the Chatios plant. In fact, the trial court thought that Chat-ios should have cooperated further by accepting the installation of the programs. This is not a case where the seller acted unreasonably or in bad faith.

Id. at 1087 (footnote omitted).

I have examined the cases cited by Chat-ios in support of the award and find them inapposite. Thus, I conclude that under New Jersey law Chatios is not entitled to prejudgment interest.

VI.

On this record, therefore, the damages to which plaintiff is entitled are $46,020 less $6,000, the fair market value at time of trial of the retained hardware, and less $1,000, the fair market value of the payroll program, or the net sum of $39,020.

Accordingly, I would reverse the judgment of the district court and direct it to enter judgment for the plaintiff in the sum of $39,020 with interest from the date of entry of the initial judgment at the rate allowed by state law.

SUR PETITION FOR REHEARING

Before SEITZ, Chief Judge, and ALDISERT, ADAMS, HUNTER, WEIS, GARTH, HIGGINBOTHAM, SLOVITER, BECKER and ROSENN, Circuit Judges.*

The petition for rehearing filed by appellant in the above entitled case having been submitted to the judges who participated in the decision of this court and to all the other available circuit judges of the circuit in regular active service, and no judge who concurred in the decision having asked for rehearing, and a majority of the circuit judges of the circuit in regular active service not having voted for rehearing by the court in banc, the petition for rehearing is denied. Judges Adams, Hunter and Garth would grant the petition for rehearing.

ADAMS, Circuit Judge,

dissents from the denial of rehearing, and makes the following statement:

Ordinarily, an interpretation of state law by this Court, sitting in diversity, is not of sufficient consequence to warrant reconsideration by the Court sitting in banc. One reason is that if a federal court misconstrues the law of a state, the courts of that state have an opportunity, at some point, to reject the federal court’s interpretation. See Chuy v. Philadelphia Eagles Football Club, 595 F.2d 1265, 1286-87 (3d Cir. 1979) (in banc) (Aldisert, J., dissenting). In this case, however, the majority’s holding, which *1316endorses a measure of damages that is based on what appears to be a new interpretation of New Jersey’s commercial law, involves a construction of the Uniform Commercial Code as well. Rectification of any error in our interpretation is, because of the national application of the Uniform Commercial Code, significantly more difficult than it would be if New Jersey law alone were implicated. ■Moreover, the provision of the Uniform Commercial Code involved here is of unusual importance: the measure of damages approved by this Court may create large monetary risks and obligations in a wide range of commercial transactions, including specifically the present burgeoning computer industry. Because there would appear to be considerable force to the dissenting opinion of Judge Rosenn and because I believe that the principle articulated by the majority should be reviewed by the entire Court before it is finally adopted, I would grant the petition for rehearing in banc.

JAMES HUNTER, III and GARTH, Circuit Judges join in this statement.

BY THE COURT,

RUGGERO J. ALDISERT

Circuit Judge

NEWMAN, Associate Judge:

In this appeal we are asked to decide what remedy is available to the successful bidder at a foreclosure sale when the trustees fail to convey the mortgaged property after discovering that the borrower was, in fact, not in default the time of the sale. Because we can discern no basis for distinguishing this breach of contract from that by any other vendor of real property who fails to convey for lack of good title, we hold that Basiliko is entitled to contract damages measured by the difference between the foreclosure sale contract price and the fair market value of the property at the time when the property should have been conveyed to him by the trustees. This remedy returns to the foreclosure sale buyer the benefit of the bargain he had struck at that sale.

While Basiliko is entitled to these standard breach of contract damages (protecting his expectation interest in the enforceability of the foreclosure sale contract), he is not entitled to any special or consequential damages which would permit him to recoup the value of a resale contract that he later entered into with Pargo Corporation. Nevertheless, the price agreed upon for resale may be considered by the trial court, on remand, as evidence of the fair market value of the property at the time when the trustees should have conveyed it to Basiliko.

We reverse and remand for determination of the quantum of damages.

I.

This controversy arises from a series of unconsummated real estate transactions involving 3411 Holmead Place, Northwest. The property, securing a note held by Montgomery Federal Savings & Loan Association, was scheduled for a Trustee’s sale by virtue of a power of sale in the deed of trust on May 1, 1979. The day before the sale, however, on April 30, five minutes before the bank closed for the day, the borrower made a payment curing the delinquency. This payment, while immediately credited to the borrower’s account by computer, apparently did not come to the attention of substitute trustees Arnold L. Karp and James A. Early, Jr. before the sale took place on the following day.

George Basiliko entered the successful bid on the property at the auction held on May 1, offering a price of $28,000 and securing his purchase with a $1000 deposit. Two days later, on May 3, 1979, Basiliko entered into a resale contract with Pargo Corporation in which Pargo agreed to pay $35,100 for the Holmead Place property. Basiliko expressly conditioned this sale on his “obtaining good title at [the] foreclosure sale.” Pargo, in turn, contracted on May 7, 1979, to sell the same property for $44,000 to Morgan O’Neill Builders.

On May 29, the date scheduled for settlement on the foreclosure sale, trustees Karp and Early refused to convey the property to Basiliko because they had been without authority to hold the sale. When Basiliko *1348subsequently failed to deliver the property to Pargo Corporation, Pargo sued Basiliko, along with Montgomery Federal, Karp and Early. Basiliko cross-claimed against the other defendants. Following trial, Judge Doyle issued an Opinion and Order dismissing on the merits both Pargo’s complaint and Basiliko’s cross-claim. The dismissal of the cross-claim is the subject of this appeal.1

II.

In his Opinion and Order, Judge Doyle took the view that the purchaser at a void foreclosure sale, “relieved as he is of paying the purchase price ... also loses what would otherwise be his own correlative position as an innocent purchaser for fair value,” and that Basiliko therefore “loses any right to sue the trustees and the cestui que trust for breach of contract to recover in damages the benefit of his bargain.”2 We disagree.

The long-settled rule in this jurisdiction is that a seller who breaches an exec-utory contract for the sale of real property is liable to the would-be purchaser for compensatory damages measured by the difference between the sales contract price and the fair market value of the property at the time that the property should have been conveyed. Phillips & Sager v. Kern, 50 App.D.C. 317, 320, 271 F. 547, 550 (1921); Quick v. Pointer, 88 U.S.App.D.C. 47, 186 F.2d 355 (1950) (failure to convey for lack of good title); Wolf v. Cohen, 126 U.S.App. D.C. 423, 425, 379 F.2d 477, 479 (1967) (damages for delay in conveyance). The District of Columbia thus follows the “American rule,” which allows the frustrated purchaser of real property, like any other victim of a breach of contract, the benefit of the bargain he has negotiated. See 5 A. Corbin, Contracts § 1098, at 525 (1964); D. Dobbs, Handbook on the Law of Remedies § 12.8, at 833-36 (1973); Donovan v. Bachstadt, 91 N.J. 434, 453 A.2d 160, 163-65 (1982) (adopting “American rule”). See also Thompson v. Rector, 83 U.S.App.D.C. 371, 373, 170 F.2d 167, 169 (1948) (measure of contract damages is “value of the benefit contracted for”).

This “benefit of the bargain” formula, the standard contract damage remedy, should not be confused with an award of special or consequential damages compensating a disappointed buyer for the value of a resale contract with a third party (for example, in this case, the contract between Basiliko and Pargo Corporation). See generally Dobbs, supra, § 12.1, at 786-87. Our jurisdiction has squarely rejected the availability of damages for the lost profit of anticipated resale. Quick, supra.

The trial court’s decision would, in effect, apply the “English rule” of Flureau v. Thornhill, 2 W.Bl. 1078, 96 Eng.Rep. 635 (C.P.1776), to this case, allowing the disappointed purchaser merely the return of his deposit plus interest and expenses, thereby restoring him to the position he occupied prior to negotiating the contract rather than compensating him for the expectation that has been breached. See Corbin, supra, § 1097, at 523-24; Dobbs, supra, § 12.8, at 833-36; Donovan, supra, 453 A.2d at 163-65. We can find no justification in law or policy for such exceptional treatment in the case of a foreclosure sale.

A principal reason given for the development of the Flureau rule in England was the absence there of an adequate system for assuring certainty of title. Dobbs, supra, § 12.8, at 835; Donovan, supra, 453 A.2d at 164. Under such circumstances, the law recognized the unfairness of imposing the risk of this uncertainty on the seller alone. By contrast, in the United States, where recording systems developed, many jurisdictions, including the District of Columbia, have favored a rule treating breach of an executory contract for sale of real property just as breach of any other sales contract. Id. (reason for application of English rule has ceased since whether ti-*1349ties are clear can be ascertained by record searches).

The rationale offered for the English rule suggests why its application would be especially inappropriate to the facts of this case. In the District of Columbia, a purchaser of real estate is entitled to damages for the benefit of his bargain, regardless of the reasons for the seller’s breach, including a defect in title that the buyer might have been able to discover before sale. For the District to impose a harsher rule against the purchaser when the cause of the seller’s breach involves a matter within the seller’s exclusive control, and not detectable by the buyer, would be to turn the logic of Flureau on its head. Indeed, even in those jurisdictions following the Flu-reau rule, damages have sometimes been awarded when the seller had been mistaken about his authority to sell land belonging to another, Corbin, supra, § 1097, at 524, or about his ability to obtain title between the date of sale and the date of conveyance, id. at 1098, at 529 and n. 65, or fails to convey “for reasons within his control.” St. Pius X House of Retreats v. Diocese of Camden, 88 N.J. 571, 443 A.2d 1052, 1059 (1982).

In this case, the contractual breach was occasioned by a circumstance — the erroneous foreclosure of the loan — that was within the sole knowledge and control of the seller/lender Montgomery Federal and its agents,3 trustees Karp and Early. Under such circumstances, it would be especially unfair for the buyer to be required to bear the risk of this mistake. Cf. Trans World Airlines, Inc. v. Skyline Air Parts, Inc., 193 A.2d 72, 74 (D.C.1963) (impossibility of performance provides no defense to suit for contract damages against seller of goods who “knew, or should have known” that he did not have right to convey); Stern v. Ace Wrecking Co., 38 A.2d 626, 627 (D.C.1944) (same).

Likewise, the view put forth by the trial court that the applicability of the doctrine of caveat emptor to foreclosure sales somehow implicates a distinctive remedy in this case, is plainly wrong for the same reason. A buyer at a foreclosure sale is subject to the rule of caveat emptor only in the sense that “a trustee makes no warranty of title and is generally subject to no duty to investigate or describe outstanding liens or encumbrances.” Stuart v. American Security Bank, 494 A.2d 1333, 1338 (D.C.1985). See G. Osborne, Handbook on the Law of Mortgages § 344, at 741 (2d ed. 1970) (“All this [doctrine of caveat emptor ] means is that the mortgagee in selling does not give, and has no authority to give, any warranty of title; he has power to sell only the title that has been given to him as security.” (Footnote omitted)). The rule has no applicability, however, to a mistake relating to the underlying authority of lender or trustee to conduct the sale. Hence, it does not preclude, for example, liability of the mortgagee for misrepresentations in the advertisement of sale or for failure to carry out the sale in accord with the terms of the mortgage. Id. Therefore, the rule of caveat emptor can provide no basis for exempting the foreclosure sale vendor from the usual obligation that “a vendor is bound to know that he can deliver that which he professes to sell.” Trans World Airlines, supra, 193 A.2d at 75.

Finally, the contention that it would be bad policy to award benefit of the bargain damages to a disappointed purchaser at a foreclosure sale because such an award *1350would amount to a windfall” to such a buyer is also without merit. It may be true that prices at foreclosure sales classically surface somewhere below fair market value. See generally Washburn, The Judicial and Legislative Response to Price Inadequacy in Mortgage Foreclosure Sales, 53 S. Cal.L.Rev. 843 (1980). This fact, however, is an argument for — rather than against — the award of benefit of the bargain damages in this case. By awarding contract damages to Basiliko, we assure all future bidders at foreclosure sales that their expectation will be compensated if the seller breaches for reasons such as those that occurred in this case. By compensating foreclosure buyers — just as buyers generally — for this risk, we enhance the public policy of maintaining the adequacy of foreclosure sale prices, see Wash-bum, supra, and reinforce the legal duty of trastees to gamer a reasonable price for mortgagor and mortgagee, Holman v. Ryon, 61 App.D.C. 10, 13, 56 F.2d 307, 310 (1932); S. & G Investment, Inc. v. Home Federal Savings & Loan Association, 164 U.S.App.D.C. 263, 272-73, 505 F.2d 370, 379-80 (1974).

III.

Accordingly, we are unpersuaded of any reason to deviate in this case from our settled rale that a seller who breaches an executory contract for the sale of real property is liable to the frustrated purchaser in contract damages measured by the difference between the sales price of that contract (here, the price contracted for by Ba-siliko at the foreclosure sale) and the fair market value of the property at the time the property should have been conveyed. On remand, the trial court must determine what that fair market value would have been, guided by the principle that fair market value is “the price that an owner willing but not compelled to sell ought to receive from one willing but not compelled to buy.” Assessors of Quincy v. Boston Consolidated Gas Co., 309 Mass. 60, 34 N.E.2d 623, 626 (1941). In making this assessment, the trial court may consider as evidence the price at which Basiliko had agreed to resell the property to Pargo Corporation. A resale contract provides sufficient evidence of fair market value on which to base an award of damages for breach of the initial sales contract. Downing v. H.G. Smithy Co., 125 A.2d 272, 274 (D.C.1956); see also Rogers v. Lion Transfer & Storage Co., 120 U.S.App.D.C. 186, 187, 345 F.2d 80, 81 (1965) (on buyer’s breach, trial court must give some weight to evidence of contemporaneous bona fide sales in assessing fair market value).

We remand for entry of judgment in favor of Basiliko on his cross-claim against Montgomery Federal, Karp, and Early, and for a determination of the amount of damages.

So ordered.

OPINION

TRACY CHRISTOPHER, Justice.

Appellant Garden Ridge, L.P. (Garden Ridge) sued Advance International, Inc., and Herbert A. Feinberg (collectively, Advance) for breach of contract and a declaratory judgment that Garden Ridge had *435complied with its contracts with Advance. Advance counterclaimed for breach of contract. The jury found in favor of Advance. Although Garden Ridge accepted two shipments of inflatable snowmen from Advance, Garden Ridge refused to pay anything for either shipment, claiming that one shipment was nonconforming. Garden Ridge based its refusal to pay on charge-back provisions outlined in the parties’ contracts. Advance argued that the chargeback provisions are unenforceable penalties.

On appeal, Garden Ridge argues that the trial court committed reversible error when it (1) refused to submit a question on prior material breach, (2) improperly instructed the jury on damages, and (3) commented on the weight of the evidence in its instructions on breach of contract. We conclude that the chargeback provisions as applied in this case are unenforceable as a matter of law as penalties, and we overrule Garden Ridge’s jury charge issues. We therefore affirm the trial court’s judgment.

I. Factual and Procedural Background

Garden Ridge is a Houston-based chain of housewares and home décor stores. Advance International, a company owned by Feinberg, is one of Garden Ridge’s vendors. In 2009, Advance sent Garden Ridge quote sheets for lighted inflatable holiday snowmen, which included a color photo of each item and described its cost, weight, dimensions, and packaging. The two snowmen on the quote sheets each wore a scarf, held a broom that stated “Merry Christmas” on it, and waved; one stood eight feet tall, and the other stood nine feet tall. We refer to this snowman as “waving snowman.” Advance then sent two sample snowmen1 to Garden Ridge; one of the samples did not match its quote sheet. The sample eight-foot snowman wore a Santa-type hat and held a “Merry Christmas” banner. We refer to this snowman as “banner snowman.”

Garden Ridge sent Advance two purchase orders, one for approximately 950 nine-foot waving snowmen (PO '721), and the other for approximately 3,500 eight-foot waving snowmen (PO '743), based on the quote sheets. Garden Ridge planned to sell each nine-foot waving snowman for $59.99, and each eight-foot waving snowman for $39.00. Garden Ridge planned to mark down the eight-foot waving snowmen to $20.00 each during its one-day Thanksgiving Shop-a-Thon sale, and it prepared and had printed an advertising circular promoting this special price and picturing the eight-foot waving snowman.

Five days before Thanksgiving, Garden Ridge realized that the eight-foot snowmen that Advance sent were not waving snowmen, but instead were banner snowmen. The nine-foot snowmen that Advance sent were waving snowmen. Garden Ridge decided to honor the $20.00 Shop-a-Thon price on the nine-foot waving snowmen. There were no customer complaints, and both the eight-foot banner snowmen and the nine-foot waving snowmen sold well.

The parties’ contracts consist of the purchase orders, the vendor cover letter, and the vendor compliance manual. Based on liquidated-damages provisions outlined in the vendor compliance manual, Garden Ridge assessed chargebacks against Advance for its alleged noncompliance violations. For Advance’s “purchase order” violation — by sending the eight-foot banner snowman instead of the waving snowman, Garden Ridge charged back to Advance the entire merchandise cost plus the cost of freight on PO '743 as a “unauthorized substitution” chargeback, which totaled *436$49,176.00. In addition to paying nothing for the eight-foot banner snowmen, Garden Ridge paid nothing for the nine-foot waving snowman despite the fact that those snowmen complied with PO '721. Garden Ridge charged back to Advance the entire merchandise cost plus the cost of freight on the nine-foot waving snowmen as a “merchant initiated” chargeback, which totaled $29,178.00. Additionally, from September through November 2009, Garden Ridge assessed another $13,241.84 in noncompliance chargebacks to Advance on other merchandise for “ticketing/packing” violations involving not marking cartons sequentially or otherwise mislabeling them, and for “purchase order” violations involving short or incomplete orders.

Advance demanded payment for its snowmen and other items and staged protests at Garden Ridge’s headquarters. Thereafter, Garden Ridge sued Advance for breach of contract and a declaratory judgment that Garden Ridge had complied with the contracts. Advance counterclaimed for breach of contract and asserted that Garden Ridge’s claims were barred because the chargeback provisions are unenforceable as penalties. Garden Ridge defended against Advance’s counterclaim by asserting that Advance breached the contracts first.

At trial, Garden Ridge’s divisional merchandise manager/viee president Linda Troy admitted that Garden Ridge made approximately $113,000 in profit on the snowmen it received from Advance, and further testified that Garden Ridge made all the money it would have made if the snowmen were delivered exactly as ordered. One of Garden Ridge’s buyers, Sheria Cole, admitted she did not know of any dollar amount that Garden Ridge was harmed by the snowmen shipment and that Garden Ridge had less-than-zero receipt cost for the snowmen. Cole also testified that she was unaware of anyone at Garden Ridge having done any actual-harm calculations from the unauthorized substitution of the eight-foot banner snowmen or any calculations to determine whether Garden Ridge’s chargebacks were reasonably proportional to any actual harm it suffered. Garden Ridge acknowledges that it did not argue any amount of actual damages other than zero and that the record reflects no actual damages resulting from Advance’s noncompliance violations.

The trial court granted Advance’s motion for directed verdict on Garden Ridge’s breach-of-contract claim because of lack of evidence on damages resulting from Advance’s noncompliance violations, but did not grant Advance’s motion for directed verdict on Garden Ridge’s declaratory-judgment claim or Advance’s motion for directed verdict seeking to have Garden Ridge’s chargeback provisions declared legally unenforceable as penalties.

The trial court submitted to the jury questions on Garden Ridge’s declaratory-judgment claim and on Advance’s breach-of-contract claim, but refused to submit a question on Garden Ridge’s prior-material-breach defense. On Garden Ridge’s declaratory-judgment claim, the jury found that Garden Ridge did not comply with the terms of the three listed agreements (to purchase the eight-foot snowmen, to purchase the nine-foot snowmen, and to purchase other items listed in the “summary of chargebacks” exhibit). On Advance’s breach-of-contract claim, the jury found that Garden Ridge failed to comply with these agreements by failing to pay for the eight-foot snowmen, the nine-foot snowmen, and other items listed in the charge-back exhibit. The jury, in separate findings, awarded Advance damages in the amount of $49,176.00 for the eight-foot snowmen, $29,781.00 for the nine-foot snowmen, and $500.00 for other items listed in the chargeback exhibit. The trial *437court rendered final judgment on the jury’s verdict and on a stipulation for legal fees.

Garden Ridge appeals the trial court’s final judgment, arguing in three issues that the trial court committed reversible error in its jury charge. First, Garden Ridge contends that the trial court erred in refusing to submit a jury question on Garden Ridge’s affirmative defense of pri- or material breach. Second, Garden Ridge argues that the trial court erred by improperly instructing the jury in the damages question on the reasonableness of Garden Ridge’s chargebacks. Third, Garden Ridge complains that the trial court’s inclusion of instructions on acceptance and contract price in the breach-of-contract question were improper comments on the weight of the evidence.

II. Analysis

A. Refusal to submit prior-material-breach question

Garden Ridge concedes that it is not entitled to a jury question on prior material breach if this court determines that the chargeback provisions are unenforceable as penalties. Thus, we first proceed to address the legal question of whether the chargeback provisions are enforceable.

1. Do the chargeback provisions at issue assess liquidated damages or penalties?

The parties agree that this case is governed by the Uniform Commercial Code, as adopted by Texas, which applies to transactions involving goods. Tex. Bus. & Com.Code Ann. § 2.102 (West 2009).2 The parties agree that section 2.718(a) of the UCC, on liquidation of damages, governs the enforceability of the chargeback provisions in this case. Section 2.718(a) provides:

(a) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or non-feasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.

Id. § 2.718(a). The parties also agree that if the chargeback provisions governing Advance’s noncompliance violations at issue are unenforceable as penalties, Garden Ridge no longer has any basis to argue that Advance committed any prior material breach.3 But what the parties do not agree on is the proper analysis by which courts determine the legal question of whether a liquidated-damages provision is unenforceable as a penalty.

a. Determining whether a liquidated-damages provision constitutes a penalty

Whether a contractual provision is an enforceable liquidated-damages pro-*438vision or an unenforceable penalty is a question of law for courts to decide. Phillips v. Phillips, 820 S.W.2d 785, 788 (Tex.1991) (citation omitted). The party asserting that a liquidated-damages clause is a penalty provision bears the burden of pleading and proof. See id. at 789 (citing Tex.R. Civ. P. 94).

“Liquidated damages” ordinarily refers to an acceptable measure of damages that parties stipulate in advance will be assessed in the event of a contract breach. Flores v. Millennium, Interests, Ltd., 185 S.W.3d 427, 431 (Tex.2005) (citing Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 664 (Tex.2005)). “The common law and the Uniform Commercial Code have long recognized a distinction between liquidated damages and penalties.” Id. (citing Tex. Bus. & Com.Code § 2.718(a), and Stewart v. Basey, 150 Tex. 666, 245 S.W.2d 484, 485-86 (1952)). Section 2.718(a) codified the common-law distinction between liquidated damages and penalties as part of Texas’ adoption of the UCC’s article on sales. Id. at 432.

In Phillips v. Phillips, the Texas Supreme Court restated the common-law test for determining whether to enforce a liquidated-damages provision. 820 S.W.2d at 788. “In order to enforce a liquidated damages clause, the court must find: (1) that the harm caused by the breach is incapable or difficult of estimation, and (2) that the amount of liquidated damages called for is a reasonable forecast of just compensation.” Id. (citing Rio Grande Valley Sugar Growers, Inc. v. Campesi, 592 S.W.2d 340, 342 n. 2 (Tex.1979), and comparing to Tex. Bus. & Com.Code § 2.718(a)). The Phillips court explained that one way a party can “show that a liquidated damages provision is unreasonable” is by showing that “the actual damages incurred were much less than the amount contracted for,” which requires the party “to prove what those actual damages were.” Id. Thus, in such a case, “factual issues must be resolved before the legal question can be decided.” Id. Phillips, however, involved no fact issues because the contractual provision at issue “by which one party agrees to pay the other some multiple of actual damages for breach of the agreement does not meet either part of the legal test for an enforceable liquidated damages provision.” Id. at 789. The Phillips court therefore declared the provision at issue — which called for “liquidated damages ten times the amount [the limited partner] loses as a result of’ a breach of trust — unenforceable as a penalty on its face. Id. at 787, 789.

The common-law test as described in Phillips closely tracks the language of section 2.718(a) of the UCC. The code allows damages to be liquidated “only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or non-feasibility of otherwise obtaining an adequate remedy.” Tex. Bus. & Com.Code Ann. § 2.718(a). It further states: “A term fixing unreasonably large liquidated damages is void as a penalty.” Id. The first clause of section 2.718(a) — “reasonable in the light of the anticipated or actual harm caused by the breach” — correlates to “reasonable forecast of just compensation,” from the common-law test. See id.; Phillips, 820 S.W.2d at 788. The second and third clauses of section 2.718(a) — “the difficulties of proof of loss, and the inconvenience or non-feasibility of otherwise obtaining an adequate remedy” — correlate to “that the harm caused by the breach is incapable or difficult of estimation,” from the common-law test. See Tex. Bus. & Com.Code Ann. § 2.718(a); Phillips, 820 S.W.2d at 788. Further, the sentence that “[a] term fixing unreasonably large liquidated damages is *439void as a penalty” under section 2.718(a) correlates to “a liquidated damages provision is unreasonable because the actual damages incurred were much less than the amount contracted for.” See Tex. Bus. & Com.Code Ann. § 2.718(a); Phillips, 820 S.W.2d at 788. We therefore conclude that the common-law test as described in Phillips and the UCC test as outlined in 2.718(a) reflect the same essential factors and the same type of reasonableness test. Thus, common-law case law continues to inform our analysis here.

b. Do actual damages matter?

Garden Ridge argues that the test is conducted entirely on an ex ante basis. That is, if, at the time the contract is formed, actual damages are difficult to estimate and the amount specified in the contract is a reasonable forecast of just compensation, a liquidated-damages term is enforceable. Garden Ridge contends that the test contains no ex post actual-harm assessment to determine reasonableness. Thus, according to Garden Ridge, Advance could only show that the charge-back provisions were unenforceable as penalties if, ex ante, actual damages are easy to estimate or the liquidated damages are based on an unreasonable forecast. Garden Ridge asserts that Advance did not meet its burden because Garden Ridge’s CFO, Bill Uhrig, testified that the charge-back schedule was created because actual damages from noncompliance violations are difficult to calculate, and that the schedule was based on computations and estimations by Garden Ridge’s executive and purchasing staff.

Garden Ridge primarily relies on two cases from the Dallas Court of Appeals. See GPA Holding, Inc. v. Baylor Health Care Sys., 344 S.W.3d 467 (Tex.App.-Dallas 2011, no pet.); Baker v. Int’l. Record Syndicate, Inc., 812 S.W.2d 53 (Tex.App.Dallas 1991, no writ). Neither of these cases, however, supports Garden Ridge’s position that the test is to be conducted solely on an ex ante basis.

In GPA Holding, the appellate court found that GPA, a third-party administrator for self-funded health plans, did not meet its burden to establish that a “clause requiring payment of normal billed charges [instead of the original provider discounted rates] after 45 days” in GPA’s hospital services agreement with Baylor was an unenforceable penalty. 344 S.W.3d at 476. GPA did not prove that “the harm from late payment is [not] difficult to estimate, or that the normal billed charges were an unreasonable forecast of the loss actually sustained.” Id. (emphasis added). Nothing in the GPA Holding court’s analysis precludes a consideration of reasonableness based on actual damages; and in fact, the court assessed Baylor’s actual damages, i.e., whether the normal billed charges were a “reasonable amount for the health care services and supplies provided in the charges at issue in this case.” Id.

In Baker, while the appellate court noted that evidence related to the difficulty of estimation and the reasonableness of the damages forecast should be viewed as of the time the contract was executed, or the “anticipated harm” test, the court also expressly stated: “Additionally, liquidated damages must not be disproportionate to actual damages. If the liquidated damages are shown to be disproportionate to the actual damages, then the liquidated damages can be declared a penalty....” 812 S.W.2d at 55. The Baker court called this the “actual harm” test: “The party asserting this defense is required to prove the amount of the other party’s actual damages, if any, to show that the actual loss was not an approximation of the stipulated sum.” Id. This “actual harm” test is entirely consistent with what the Texas *440Supreme Court stated in Phillips, that a party can show unreasonableness based on “the actual damages incurred [being] much less than the amount contracted for.” 820 S.W.2d at 788.

This court also has recognized that actual harm factors into the test to determine whether a liquidated-damages provision is an enforceable penalty. In Chan v. Montebello Development Co., we described the Phillips test as follows: “The test for determining whether a provision is valid and enforceable as liquidated damages is (1) if the damages for the prospective breach of the contract are difficult to measure; and (2) the stipulated damages are a reasonable estimate of actual damages.” Chan v. Montebello Dev. Co., No. 14-06-00936-CV, 2008 WL 2986379, at *3 (Tex.App.-Houston [14th Dist.] July 31, 2008, pet. denied) (citing Phillips, 820 S.W.2d at 788). Further, we stated:

In order to meet this burden, the party asserting the defense is required to prove the amount of the other parties’ actual damages, if any, to show that the liquidated damages are not an approximation of the stipulated sum. If the liquidated damages are shown to be disproportionate to the actual damages, then the liquidated damages must be declared a penalty....

Id. at *3-4 (citations omitted).

Most importantly, the UCC reasonableness test explicitly refers to actual harm, providing that one way a liquidated-damages provision can be invalidated is where the stipulated amount proves unreasonable in light of “the anticipated or actual harm caused by the breach.” Tex. Bus. & Com. Code Ann. § 2.718(a) (emphasis added). In addition, the UCC expressly provides that “[a] term fixing unreasonably large liquidated damages is void as a penalty.” Id.; see id. cmt. 1. In order to determine whether a term fixes unreasonably large liquidated damages, it follows that courts would need to consider what actual harm, if any, was caused by the breach and then compare it to the stipulated amount of liquidated damages.

Thus, both the common law and the UCC allow for courts to determine the reasonableness of a liquidated-damages clause by considering whether the defendant has shown that the stipulated amount was “unreasonably large” compared to the actual damages. See Tex. Bus. & Com.Code Ann. § 2.718(a); Phillips, 820 S.W.2d at 788.

c. Comparing the amount of the chargebacks to Garden Ridge’s actual damages

Advance argues that it proved that the harm anticipated from its alleged noncompliance was not difficult to estimate, that Garden Ridge did not even attempt to determine a chargeback amount that was reasonable in light of the anticipated or actual harm, and that the liquidated damages Garden Ridge assessed are disproportionate to its actual damages. We conclude Advance met its burden to show that the chargeback amounts constituted a disproportionate estimation of Garden Ridge’s actual damages; therefore, the chargeback provisions are void as penalties under the UCC.

Advance elicited evidence from Garden Ridge employees Troy and Cole sufficient to prove that Garden Ridge suffered no actual damages as a result of Advance’s substitution of the eight-foot banner snowmen. The trial court also determined that Garden Ridge suffered no actual damages from any of Advance’s noncompliance violations when the court directed a verdict against Garden Ridge on its breaeh-of-contract claim; Garden Ridge does not challenge that ruling. And Garden Ridge *441itself acknowledges it argued no amount of actual damages other than zero and the record shows that Garden Ridge suffered no actual damages resulting from Advance’s noncompliance violations.

Thus, Advance has shown that the chargebacks assessed by Garden Ridge for Advance’s “unauthorized substitution” and “merchant initiated” noncompliance violations — 100% of the invoiced merchandise cost plus freight for the eight-foot banner snowmen and the nine-foot waving snowmen, for a total of $79,457.00 — were unreasonably large when compared to Garden Ridge’s actual damages of zero. Advance also has shown that the additional charge-backs assessed by Garden Ridge for Advance’s “short or incomplete order,” “carton markings,” and “cartons not numbered correctly” noncompliance violations on other merchandise — totaling approximately $13,000 — were unreasonably large when compared to Garden Ridge’s actual damages of zero. Therefore, as a matter of law, we conclude that, under these circumstances,4 the chargeback amounts were unreasonable, and that the chargeback provisions are unenforceable as penalties under the UCC because they fixed unreasonably large liquidated damages. Accordingly, we overrule Garden Ridge’s first issue.

d. Whether the amount of the charge-backs is reasonable in light of Garden Ridge’s anticipated harm

Even if the concurring opinion is correct that Advance also had to prove the stipulated damages were unreasonable in light of the anticipated harm in order for us to conclude that the chargeback provisions are unreasonable under section 2.718(a), we conclude that Advance has done so in this case. As explained in subsection II.A.1.C., Advance has shown that the stipulated amounts are unreasonable in light of the actual harm — zero— suffered by Garden Ridge. Further, Advance has shown that the stipulated amounts are unreasonable in light of the harm anticipated by Garden Ridge.

Here, according to the challenged liquidated-damages provisions, Garden Ridge anticipated at the time of contract that an unauthorized substitution of any type would result in harm of 100% of the cost of the merchandise, plus freight. In fact, Garden Ridge’s buyer Cole testified that Garden Ridge had the discretion to assess the full 100% chargeback, even if the only deviation in the snowmen had been green versus red buttons. Cole further testified that she was not aware of any instance where Garden Ridge had decided not to issue a chargeback because there was “no harm, no foul” or where Garden Ridge had exercised its discretion to not charge back “fully” for an unauthorized substitution. Garden Ridge’s CFO Uhrig agreed that a button-color substitution would constitute noncompliance, for which Garden Ridge could charge back the full 100% of merchandise cost. In other words, no matter what the degree of substitution, and no matter whether the substitution is even anticipated to result in any harm, Garden Ridge’s unauthorized-substitution rule provides that Garden Ridge keeps the merchandise without paying the vendor any*442thing and makes the vendor cover the freight.

Even though, according to Uhrig, Garden Ridge is “very good at estimating our costs,” he admitted that at the time it was developing the chargeback schedule Garden Ridge did not perform any actual studies on what costs it would incur due to vendor noncompliance. Further, Uhrig could not explain any specifics on how Garden Ridge “figure[d] out what the costs are and what would be appropriate charge-backs.” Cole also testified that she was not aware of Garden Ridge having performed any analysis as to whether the 100% chargeback amount reasonably approximates the anticipated harm that Garden Ridge would suffer from an unauthorized substitution. Despite this lack of detail regarding the 100% chargeback amount for anticipated harm from vendor violations, Uhrig testified that “on average” charging back 100% somehow reflected Garden Ridge’s costs for unauthorized substitutions. Uh-rig further indicated that Garden Ridge’s chargebacks communicate to vendors, “Don’t do this”; and Garden Ridge’s CEO, Tim Kibarian, agreed that charge-backs are the “penalty” if its vendors do not follow its rules.

We therefore conclude that Advance has proven that Garden Ridge’s liquidated-damages provisions do not reasonably reflect Garden Ridge’s anticipated harm for an unauthorized substitution, where the challenged provisions allowed Garden Ridge to charge back 100% of merchandise cost plus freight for any unauthorized substitution, no matter how slight and no matter if Garden Ridge even anticipated incurring any harm.

B. Instruction on damages

Garden Ridge next argues that the trial court committed reversible error by including the following instruction as part of its question on Advance’s damages:

The unauthorized substitution provision in the Vendor Compliance Manual is unreasonable if the actual damages that Garden Ridge incurred were much less than the charge-back amount.

During the charge conference, Garden Ridge objected to the inclusion of this instruction as improper because whether the chargeback provisions constitute penalties was a question reserved for the court, not the jury. Garden Ridge further objected that the trial court should not include this instruction because it would permit the jury to assess damages on a basis that is not permitted in the law — that is, there is no actual-damages component to whether a liquidated damages provision is unreasonable and thus constitutes a penalty.5 The trial court overruled Garden *443Ridge’s objections, which properly are preserved for our review. See Thota v. Young, 366 S.W.3d 678, 689 (Tex.2012).

We review a trial court’s decision whether to submit a particular instruction in its charge for abuse of discretion. Id. at 687 (citing In re V.L.K., 24 S.W.3d 338, 341 (Tex.2000)); City of Houston v. Proler, 373 S.W.3d 748, 760 (Tex.App.-Houston [14th Dist.] 2012, no. pet. h.) (citing Shupe v. Lingafelter, 192 S.W.3d 577, 579 (Tex.2006)). The trial court has considerable discretion to determine proper jury instructions, and “[i]f an instruction might aid the jury in answering the issues presented to them, or if there is any support in the evidence for an instruction, the instruction is proper.” Thota, 366 S.W.3d at 687 (quoting La. Pac. Corp. v. Knighten, 976 S.W.2d 674, 676 (Tex.1998)). “An instruction is proper if it (1) assists the jury, (2) accurately states the law, and (3) finds support in the pleadings and evidence.” Id. (citing Columbia Rio Grande Healthcare, L.P. v. Hawley, 284 S.W.3d 851, 855-56 (Tex.2009)). We will not reverse a judgment for a charge error unless that error was harmful because it “probably caused the rendition of an improper judgment” or “probably prevented the petitioner from properly presenting the case to the appellate courts.” Id. (citing Tex. R.App. P. 44.1(a) and 61.1); Proler, 373 S.W.3d at 760 (citing La.Pac. Corp., 976 5.W.2d at 676 (Tex.1998)); see also Bed, Bath & Beyond, Inc. v. Urista, 211 S.W.3d 753, 757 (Tex.2006). We examine the entire record to determine whether the instruction probably caused an improper judgment. Thota, 366 S.W.3d at 686-87; Urista, 211 S.W.3d at 757.

As discussed above in subsection II.A.l.b, a party can prove that a liquidated-damages clause is unenforceable and void as a penalty if it shows that the actual damages incurred by the other party are much less than or disproportionate to the contracted-for amount. The complained-of instruction here essentially tracks the language from Phillips — that a liquidated-damages provision is unreasonable and unenforceable as a penalty “because the actual damages incurred were much less than the amount contracted for.” See 820 S.W.2d at 788. Therefore, the instruction properly stated the “actual harm” portion of the common-law test. Id.; see also Chan, 2008 WL 2986379, at *3. Further, the complained-of instruction correlates to the equivalent portion of the UCC test that “[a] term fixing unreasonably large liquidated damages is void as a penalty.” Tex. Bus.Code Ann. § 2.718(a).

However, because the instruction concerns whether the chargeback provisions are unreasonable and thus unenforceable as penalties, which is a legal issue for the trial court to decide, Phillips, 820 S.W.2d at 788, we conclude that the trial court improperly submitted this instruction6 to the jury. The complained-of instruction describes a reasonableness *444analysis that the trial court itself was supposed to conduct — this instruction, despite its proper statement of the law, would not assist the jury. See Thota, 366 S.W.3d at 687. Moreover, although the Phillips court indicated that in some cases the jury might have to resolve a factual issue before the trial court can decide the ultimate legal question of enforceability, here, no fact issues remained; the trial court already had found that Garden Ridge suffered no breach-of-contract actual damages due to Advance’s noncompliance violations when the court directed a verdict against Garden Ridge on that claim. See 820 S.W.2d at 788. As a matter of law, these chargebacks were unreasonable and void as penalties; “consequently, [the instruction] w[as] surplusage, expressly prohibited by the Texas Supreme Court in Acord v. General Motors Corp., 669 S.W.2d 111, 116 (Tex.1984).” Bean v. Baxter Healthcare Corp., 965 S.W.2d 656, 664 (Tex.App.-Houston [14th Dist.] 1998, no pet.); see also Elloway v. Pate, 238 S.W.3d 882, 896 (Tex.App.-Houston [14th Dist.] 2007, no pet.) (citing Acord, 669 S.W.2d at 116). The trial thus abused its discretion by unnecessarily instructing the jury on the reasonableness of Garden Ridge’s chargebacks.

Our review of the record reveals, however, that this abuse of discretion was harmless.7 Including a surplus instruction on the law is only harmful when it amounts to a comment on the weight of the evidence. Bean, 965 S.W.2d at 664 (discussing Acord, 669 S.W.2d at 113, 116). Although the trial court instructed jurors about a potential situation where Advance’s damages may be reduced to essentially nothing — that is, if Garden Ridge’s chargebacks actually were reasonable and thus enforceable as a matter of law — including this instruction was not “reasonably calculated to cause [nor] probably did cause prejudicial harm to appellant ]” Garden Ridge. See Acord, 669 S.W.2d at 116 (citation omitted). Moreover, by including this instruction, the trial court “did not offer [its] opinion, assume the truth of a material fact, exaggerate, minimize, or withdraw relevant evidence.” See Bean, 965 S.W.2d at 664. Therefore, including the surplus instruction did not constitute a comment on the weight of the evidence.

Nor did including the improper instruction mislead or confuse the jury in its determination of damages on Advance’s breach-of-contract claim. Advance presented evidence relating to over $92,000 in chargebacks Garden Ridge assessed, and evidence that these chargebacks reflected what Garden Ridge deducted from Advance’s merchandise invoices. The jury’s answers to what was “the difference between what Garden Ridge agreed to pay and what it actually paid for [the] snowmen” reflect that the jury considered the contract rate as what Garden Ridge agreed to pay for the nine-foot and eight-foot snowmen within PO '721 and PO '743, which included collection of freight, and that Garden Ridge actually paid nothing whatsoever to Advance for these snowmen. Thus, the jury found that for the snowmen Advance had proven its full amount of damages — that the differences reflected the exact amounts Garden Ridge charged *445back. The jury’s answer to what was “the difference between what Garden Ridge agreed to pay and what it actually paid for other items charged back on [Advance’s] Exhibit” reflects that the jury considered the evidence presented on the remaining approximately $13,000 in chargebacks and determined that Advance had proven damages on $500 of these other chargebacks. Therefore, the erroneous instruction did not probably cause the rendition of an improper judgment; and we overrule Garden Ridge’s second issue.

C. Instructions on breach of contract

In its final issue, Garden Ridge argues that the trial court’s inclusion of the UCC’s definition regarding what constitutes the acceptance of goods — section 2.606(a)8— and the UCC’s provision that the buyer must pay the contract rate for goods it accepts — section 2.607(a)9 — in its instructions to the jury on Advance’s breach-of-contract claim constituted an impermissible comment on the weight of the evidence. During the charge conference, Garden Ridge objected to the inclusion of these instructions as unnecessary because Garden Ridge did not dispute that it accepted the goods. Garden Ridge thus contends that these “surplusage” instructions improperly “nudged” the jury toward Advance’s theory of the case. The trial court overruled Garden Ridge’s objections, which properly are preserved for our review. See Thota, 366 S.W.3d at 689.

This is a UCC breach-of-contract case in which Advance pleaded, and presented evidence, that Garden Ridge breached by accepting and then not paying the contract price for the snowmen and other goods at issue. The parties do not dispute that their contracts are governed by the UCC. Section 2.606(a) and section 2.607(a), the sources of the trial court’s instructions, are located in the UCC subchapter concerning “Breach, Repudiation, and Excuse.” Further, both of these instructions properly state the law. Tex. Bus. & Com.Code Ann. § 2.606(a) & 2.607(a) (West 2009). These instructions thus are proper because they (1) assisted the jury in answering the breach question, (2) accurately stated the law, and (3) found support in the pleadings and evidence. See Thota, 366 S.W.3d at 687 (citing Hawley, 284 S.W.3d at 855-56). We therefore conclude that the trial court did not abuse its discretion by submitting the complained-of trial instructions.

III. Conclusion

Accordingly, having overruled all of Garden Ridge’s issues, we affirm the trial court’s judgment.

FROST, J., concurring.

*446Appendix A

KEM THOMPSON FROST, Justice,

concurring.

In an issue of first impression in this court, the majority construes Texas Business and Commerce Code Section 2.718(a) in a manner that conflicts with the unambiguous language of that provision and with opinions from two sister courts of appeals. By allowing a breaching party to show that a liquidated-damages provision is unreasonable based only upon a comparison between the amount of the stipulated damages and the amount of the actual damages incurred, the majority exposes liquidated-damages provisions in sale-of-goods contracts to a legal standard that may bar enforcement of many such provisions based upon a hindsight analysis that the Texas Legislature never intended.

Text of the Applicable Statute

Appellant/plaintiff Garden Ridge, L.P. asserts that the liquidated-damages provisions in its contracts for the sale of goods with appellee/defendant Advance International, Inc. are enforceable. Advance maintains that these provisions are void as penalties and unenforceable. Both sides agree, and the law provides, that this issue is governed by Texas Business and Commerce Code section 2.718(a), which provides in its entirety as follows:

(a) Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or non-feasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.

Tex. Bus. & Comm.Code Ann. § 2.718(a) (West 2013).

We review the trial court’s interpretation of applicable statutes de novo. See *447Johnson v. City of Fort Worth, 774 S.W.2d 653, 655-56 (Tex.1989). In construing a statute, our objective is to determine and give effect to the Legislature’s intent. See Nat’l. Liab. & Fire Ins. Co. v. Allen, 15 S.W.3d 525, 527 (Tex.2000). If possible, we must ascertain that intent from the language the Legislature used in the statute and not look to extraneous matters for an intent the statute does not state. Id. If the meaning of the statutory language is unambiguous, we adopt the interpretation supported by the plain meaning of the provision’s words. St. Luke’s Episcopal Hosp. v. Agbor, 952 S.W.2d 503, 505 (Tex.1997). We must not engage in forced or strained construction; instead, we must yield to the plain sense of the words the Legislature chose. See id.

Interpretation of the Statutory Text

Advance, as the party asserting- that the liquidated-damages provisions are penalties, had the burden of proving that these provisions do not satisfy the applicable legal standard for an enforceable liquidated-damages provision under Section 2.718(a). Baker v. International Record Syndicate, Inc., 812 S.W.2d 53, 55 (Tex. App.-Dallas 1991, no writ). Under the plain meaning of Section 2.718(a), it was incumbent upon Advance to establish that the amount of damages set by the provisions in question was not reasonable in light of the anticipated harm and the actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or non-feasibility of otherwise obtaining an adequate remedy. See Tex. Bus. & Comm. Code Ann. § 2.718(a).

Both Section 2.718(a) and Texas common law provide that a liquidated-damages provision is enforceable as long as it is not a penalty. See id.; Phillips v. Phillips, 820 S.W.2d 785, 788 (Tex.1991) (discussing legal standard under Texas common law). But, to prove that a provision is a penalty under Texas common law, a party must prove that (1) the harm caused by the breach is not incapable or difficult of estimation, or (2) that the amount of liquidated damages called for is not a reasonable forecast of just compensation. See Phillips, 820 S.W.2d at 788. The Supreme Court of Texas has indicated that a party may prove that the amount of liquidated damages is not a reasonable forecast of just compensation under the common-law test only by showing that the actual damages incurred were much less than the liquidated-damage amount. See id.

As can be seen by comparing the legal standard under Section 2.718(a) and the legal standard under Texas common law, the two legal standards are significantly different. See McFadden v. Fuentes, 790 S.W.2d 736, 737-38 (Tex.App.-El Paso 1990, no writ) (holding that the legal standard under Section 2.718(a) is different from and supersedes the legal standard under Texas common law in sales-of-goods cases); George E. Henderson, A New Chapter 2 for Texas: Well-Suited or Ill-Fitting? 41 Tex. Tech. L.Rev. 235, 488-91 (2009) (attaching law professor’s analysis concluding that the legal standard under Section 2.718(a) is different from the legal standard under Texas common law). See also Phillips, 820 S.W.2d at 788 (reciting the legal standard from Texas common law and then citing Section 2.718(a) with a “Cf.” signal, indicating that the statute is different from the common law but deals with an analogous subject matter).

Under Section 2.718(a), Advance had the burden of proving that the amount of damages set by the provisions in question was not reasonable in the light of both the anticipated harm and actual harm caused by the breach. See Tex. Bus. & Comm. Code Ann. § 2.718(a); Henderson, supra, 41 Tex. Tech. L.Rev. at 491 (attaching law *448professor’s analysis concluding that under Section 2.718(a) a liquidated-damages provision is valid if reasonable with respect to either anticipated harm or actual harm caused by the breach). Under the unambiguous meaning of the word “or” in the statute, a liquidated-damages provision may be reasonable based upon either anticipated harm or actual harm caused by the breach. See Comdisco, Inc. v. Tarrant County App. Dist., 927 S.W.2d 325, 327 (Tex.App.-Fort Worth 1996, writ ref'd) (holding, in Supreme Court of Texas precedent, that unambiguous meaning of “or” in statute was the disjunctive).1 If a liquidated-damages provision may be reasonable based upon either anticipated harm or actual harm caused by the breach, then Advance, as the party with the burden of proving the provision is unenforceable, had to establish unreasonableness under both anticipated harm and actual harm caused by the breach. See Tex. Bus. & Comm. Code Ann. § 2.718(a).

The majority concludes that the legal standard under Section 2.718(a) is the same as the legal standard under Texas common law and that Advance did not have to show that the liquidated-damages provision was not reasonable in light of the anticipated harm. See ante at pp. 437-40. This conclusion is contrary to the plain meaning of the statutory text, under which the liquidated-damages amount may be reasonable based upon either anticipated harm or actual harm caused by the breach. See id. The majority treats the statutory sentence “[a] term fixing unreasonably large liquidated damages is void as a penalty” as equivalent to the following sentence from Phillips’s articulation of the common law rule: “a liquidated damages provision is unreasonable because the actual damages incurred were much less than the amount contracted for.” See ante at p. 439 (considering second sentence from Section 2.718(a) as equivalent to this sentence from Phillips); Tex. Bus. & Com. Code Ann. § 2.718(a); Phillips, 820 S.W.2d at 788. In the second sentence of Section 2.718(a), the Legislature did not address the legal standard by which courts are to determine whether a liquidated-damages provision is void as a penalty; that standard is addressed in the first sentence of Section 2.718(a). See Tex. Bus. & Com.Code Ann. § 2.718(a).

The majority relies upon the Supreme Court of Texas’s decision in Flores v. Millennium Interests, Ltd. See 185 S.W.3d 427 (Tex.2005). The Flores court addressed the circumstances under which a seller of real property under a contract for deed may be liable for the statutory “liquidated damages” afforded in Texas Property Code section 5.077(c). See id. at 429-33. In a general discussion of the meaning of the term “liquidated damages,” the Flores court correctly stated that both Texas common law and Section 2.718(a) recognize a distinction between an enforceable liquidated-damages provision and a void penalty. See id. at 431. The Flores court did not state that the legal standards under Section 2.718(a) and the common law are the same, nor did the Flores court address the legal standard a party must satisfy to show that a liquidated-damages provision is a penalty under Section 2.718(a). See id. at 429-33. The Flores case does not support the majority’s analysis.

The majority also relies upon the Supreme Court of Texas’s decision in Phil*449lips. See 820 S.W.2d at 788. The Phillips court addressed the legal standard under Texas common law. See id. Determining the proper legal standard under Section 2.718(a) was not before the Phillips court, and the court did not address this issue. See id. The Phillips court did not state that the legal standards under Section 2.718(a) and the common law are the same. See id. Instead, after reciting the legal standard under Texas common law, the Phillips court cited Section 2.718(a) with a “Cf.” signal, indicating that the statute is different from the common law but deals with an analogous subject matter. See id. The Phillips court did not address the difference between the two legal standards, and this difference was not necessary to the disposition of that case. See id. The Phillips case does not support the majority’s analysis regarding the legal standard under Section 2.718(a).

The majority further relies upon this court’s opinion in Chan v. Montebello Development Company. See No. 14-06-00936-CV, 2008 WL 2986379, at *3-6 (Tex.App.-Houston [14th Dist.] July 31, 2008, pet. denied) (mem. op.). The Chan court addressed the legal standard under Texas common law. See id. Because the determination of the proper legal standard under Section 2.718(a) was not before the Chan court, the court did not address this issue. See id. Nor did the Chan court state that the legal standards under Section 2.718(a) and the common law are the same. See id. The Chan case does not support the majority’s analysis regarding the legal standard under Section 2.718(a).

An Unwarranted Hindsight Analysis

Under the legal standard the majority adopts today, parties breaching sale-of-goods contracts may avoid enforcement of liquidated-damages provisions based upon a hindsight analysis. This approach not only contravenes the statutory text but also undermines important freedom-of-contract values that are a cornerstone of Texas jurisprudence.

Texas has a fundamental public policy in favor of a broad freedom of contract. See Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84, 95 (Tex.2011) (stating that “[a]s a fundamental matter, Texas law recognizes and protects a broad freedom of contract”). Liquidated-damages provisions in commercial transactions benefit both sides by providing certainty and predictability. By including Section 2-718(a) in Texas’s version of the Uniform Commercial Code, the Texas Legislature recognized the utility of liquidated-damages clauses and parties’ willingness and desire to choose this remedy in transactions involving the sale of goods. See Tex. Bus. & Com.Code Ann. § 2.718(a). The Legislature also recognized that in certain situations, liquidated-damages provisions should not be enforceable, and the Legislature crafted a specific legal standard for making this determination. See id.

When a buyer and a seller agree to a liquidated-damages provision, both parties have a potential upside and a potential downside. The idea is that, even though the non-breaching party’s expectation damages may be far greater than the amount specified in the liquidated-damages clause, the non-breaching party’s recovery is capped at the amount of specified liquidated damages. Under freedom-of-contract principles, courts must honor the parties’ agreement unless the stipulated amount is shown to be unreasonable under Section 2.718(a). See id. Under this standard, as discussed above, the party asserting that the provision is void as a penalty must prove that the stipulated amount is unreasonable based both on the harm anticipated at the time of contracting and the actual harm caused by the breach. At the *450time of contracting, unknown factors often make estimation and.calculation of potential damages uncertain.2 This uncertainty at the time of contracting is often what makes the determination of liquidated damages difficult. Hindsight has a way of making estimations that were reasonable at the time seem unreasonable after a breach. By the time a breach has occurred and the dispute has come to court, the costs and valuations are often easier to estimate and, with hindsight, honest estimates made at the inception of the contract might prove to be too high or too low. This is part of the risk of doing business that parties embrace when agreeing to a liquidated-damages provision. In evaluating these provisions, courts should not lose sight of important principles of freedom of contract and must uphold the sanctity of contract unless the liquidated-damages provision is shown to be a penalty under the standard articulated by the Legislature in Section 2.718(a). See id.

With the legal standard adopted by the majority today, the court fails to honor the Legislature’s intent of providing leeway for the parties to have stipulated to an amount of liquidated damages that was reasonable under conditions prevailing at the time of contracting but that ends up not measuring damages in a completely accurate manner in a particular case. Enforcing liquidated-damages provisions when they accurately gauge actual damages and not enforcing them when they do not deprives the non-breaching party of the remedy it bargained to receive, contrary to Section 2.718(a). See id.

A Possible Resolution on the Horizon

The Supreme Court of Texas has yet to address the legal standard a party must satisfy to show that a liquidated-damages provision is a penalty under Section 2.718(a). With today’s opinion from this court, there are now three different and conflicting views on this question from the three intermediate appellate courts that have addressed this issue. Compare ante at pp. 437-40, with TXU Portfolio Management Co. v. FPL Energy, LLC, 328 S.W.3d 580, 587-88 (Tex.App.-Dallas 2010, pet. granted), and with McFadden, 790 S.W.2d at 737-38. The Supreme Court of Texas has granted review in a case in which this issue has been presented. See Petition for Review, FPL Energy, LLC v. TXU Portfolio Management Co., No. 11-0050 (Tex. granted Feb. 17, 2012). If this issue is not addressed in the Supreme Court of Texas’s opinion in the FPL Energy case, uniformity and predictability in the application of Section 2.718(a) would be served by high-court review of this issue in this case or another.

Conclusion

The majority’s interpretation of Section 2.718(a) is more restrictive, than the legal standard provided by the Legislature under the plain meaning of that statute. But, because no error asserted by Garden Ridge probably caused the rendition of an improper judgment or probably prevented Garden Ridge from properly presenting this case on appeal, the trial court’s judgment should be affirmed. Accordingly, *451though I respectfully decline to join the majority opinion, I concur in the court’s judgment.

BOWNES, Senior Circuit Judge.

This is an appeal from a summary judgment in favor of plaintiff-appellee Space Master International, Inc. (“Space Master”). The City of Worcester, defendant-appellant, hired Space Master to construct modular classrooms to alleviate overcrowding in the City’s public schools. Under the publicly-bid contract, the City agreed to pay Space Master $1,514,559 to install within 120 days twenty-three modular classroom buildings at nine school sites. If performance exceeded 120 days, the City reserved the right to assess Space Master liquidated damages of $250 per day plus $100 per day per site.

*17Space Master completed its work over 200 days late; the city retained $254,400 in liquidated damages. Space Master then sued the City in the United States District Court of Massachusetts,1 seeking the withheld funds on the grounds that the liquidated damages provision was unenforceable. It alleged that the liquidated damages clause was not reasonably related to any anticipated or actual loss and that the liquidated damages withheld by the City were disproportionate to the damages incurred. Space Master claimed in the alternative that even were the liquidated damages clause found to be enforceable, plaintiff should not be held liable for the entire amount of liquidated damages because the delay was caused by acts of the City, subcontractors and factors beyond Space Master’s control.

The City moved for partial summary judgment on the enforceability of the liquidated damages provision. It conceded that “the matter of how much in liquidated damages should be assessed against Space Master [should be] reserved until after a trial on the reasons for the delay.” Space Master filed a cross-motion for summary judgment on the enforceability of the liquidated damages clause. After a hearing, the court granted Space Master’s motion and denied the City’s. The City appeals this ruling.

Standard of Review

A district court must enter summary judgment pursuant to Fed.R.Civ.P. 56(c) if

the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

“[S]ummary judgment will not lie if the dispute about a material fact is ‘genuine,’ that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). Massachusetts contract law “will identify which facts are material.” See id.

Our review is plenary, and we “view the record in the light most favorable to the party against whom a motion for summary judgment is directed, and give that party the benefit of all the reasonable inferences to be drawn therefrom.” J.I. Corp. v. Federal Ins. Co., 920 F.2d 118 (1st Cir.1990). We apply this standard as well where summary judgment motions were made by opposing parties. Continental Casualty Co. v. Canadian Universal Ins. Co., 924 F.2d 370, 373 (1st Cir.1991). “[T]he [trial] court must evaluate each motion separately, being careful to draw inferences against each movant in turn.” Griggs-Ryan v. Smith, 904 F.2d 112, 115 (1st Cir.1990).

Liquidated Damages

Under the Restatement of Contracts:

Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy.

Restatement (Second) of Contracts § 356(1) (1979). Two factors combine to determine whether an amount fixed as liquidated damages is not so unreasonably large as to be unenforceable. First, to be reasonable the amount must approximate actual loss or loss anticipated at the time the contract was executed. Colonial at Lynnfield, Inc. v. Sloan, 870 F.2d 761, 764 (1st Cir.1989) (citing Security Safety Corp. v. Kuznicki, 350 Mass. 157, 213 N.E.2d 866, 867 (1966); A-Z Servicenter, Inc. v. Segall, 334 Mass. 672, 138 N.E.2d 266, 268 (1956); Lynch v. Andrew, 20 Mass.App.Ct. 623, 481 N.E.2d 1383, 1386 (1985); Restatement (Second) of Contracts § 356 (1981)). Second, “[t]he greater the difficulty either of proving that *18loss has occurred or of establishing its amount with the requisite certainty ... the easier it is to show that the amount fixed is reasonable.” Restatement (Second) of Contracts § 356 comment b.

Considerable deference is given to the parties’ reasonable agreement as to the amount of liquidated damages where losses are difficult to quantify. Lynch v. Andrew, 481 N.E.2d at 1386; Kroeger v. Stop & Shop Cos., 13 Mass.App.Ct. 310, 432 N.E.2d 566, 573 (1982). That deference, however, is not unlimited. In Colonial at Lynnfield, Inc. v. Sloan, we found that the liquidated damages provision at issue was a reasonable estimate of difficult to ascertain damages. We nonetheless found that the liquidated damages provision was an unenforceable penalty because no loss had been sustained as a result of the breach. 870 F.2d at 765. Liquidated damages must compensate for loss rather than punish for breach: “[A]n exaction of punishment for a breach which could produce no possible damage has long been deemed oppressive and unjust.” Priebe & Sons, Inc. v. United States, 332 U.S. 407, 413, 68 S.Ct. 123, 127, 92 L.Ed. 32 (1947). See also Dubinsky v. Wells Bros. Co., 218 Mass. 232, 105 N.E. 1004 (1914) (liquidated damages clause was unenforceable penalty because it was intended to secure performance; no substantial loss was sustained).

There can be no question that the injury sustained by the City is difficult to quantify in monetary terms. Because Space Master breached its promise to provide classrooms for the City within 120 days, children had to attend classes in hallways, gymnasiums, auditoriums, and libraries; educational programs were compromised; and morale among teachers, students and administrators suffered. These conditions continued for over 200 days past the contract deadline.

We have found no Massachusetts case directly on point; that is, where the injury involved harm to the public and was difficult to assess in monetary terms. Cases in other jurisdictions do allow such recovery. See Jennie-O-Foods, Inc. v. United States, 580 F.2d 400, 413, 217 Ct.Cl. 314 (1978) (upholding liquidated damages for “[cjosts to the public convenience and the temporary thwarting of the public goals that the particular contract served”); United States v. Bills, 639 F.Supp. 825, 831 (D.N.J.1986) (liquidated damages upheld for loss of doctor’s services in medically underserved area); United States v. Swanson, 618 F.Supp. 1231, 1243-44 (E.D.Mich. 1985) (same); Abel Constr. Co. v. School Dist., 188 Neb. 166, 195 N.W.2d 744, 746-48 (1972) (upholding liquidated damages of $4,650.00 where late completion of athletic track resulted in expenses of $1,137.16, school was unable to use athletic facilities, and school and public suffered inconvenience to which no monetary value could be fixed). Cf. In re D. Federico Co., 25 B.R. 822, 833 (Bankr.D.Mass.1982) (liquidated damages for delay in performance of public contract upheld without articulating type of damages caused by delay). As the Court said in Priebe & Sons, Inc. v. United States, “When they are fair and reasonable attempts to fix just compensation for anticipated loss caused by breach of contract, [liquidated damages provisions] are enforced. They serve a particularly useful function when damages are uncertain in nature or amount or are unmeasurable, as is the case in many government contracts.” 332 U.S. at 411, 68 S.Ct. at 126 (citations omitted, emphasis added).

Rulings on liquidated damages provisions in construction contracts are particularly deferential to the parties’ agreement. Delay in performance prevents the possibility of use, “and it can seldom be shown that no use would in fact have been made, had completion been on time, or that no profit would have been made from such use.” 5 Corbin, Corbin on Contracts § 1072 (1964). In Norcross Bros. Co. v. Vose, 199 Mass. 81, 85 N.E. 468 (1908), the court enforced liquidated damages for delay in construction without questioning the reasonableness of the amount. It is worthy of note that most construction contracts are the product of arms-length bargaining. In the present case, the contract was put out for bid.

*19Massachusetts applies general principles of contract law to public contracts. See R. Zoppo Co. v. Commonwealth, 353 Mass. 401, 232 N.E.2d 346, 349 (1967). We think it would apply the rule set forth in Lynch v. Andrew, 481 N.E.2d at 1386, and Kroeger v. Stop & Shop Cos., 432 N.E.2d at 573, to the case at hand: Where losses are difficult to ascertain, considerable deference is due the parties’ “reasonable” agreement as to liquidated damages. The basic question is whether the City intended the liquidated damages provision in the contract to compensate it for a loss difficult to quantify in monetary terms or intended it as a penalty to spur timely performance. We turn, therefore, to the evidence before the district court. Dr. John E. Durkin, Superintendent of the Worcester Public Schools, stated in an affidavit:

When the contract was executed, it was difficult to ascertain the value of actual damages that would result from a delay in the contract’s completion. The City could have incurred costs for the completion of the classroom delivery and installation by another contractor. The City might have decided to lease additional classroom space from a private party. The City could have paid to refurbish other public properties to be used as classroom space. The City could have incurred damages in the form of interest payments due on the borrowing that was done to pay for the contract at issue. The City could have incurred costs to pay for its own personnel for additional time that was required because of the need to supervise and monitor the completion of the necessary work to alleviate the overcrowding. The City could have been damaged by the continuing overcrowding problems and the impact such problems had on the quality of education that could be offered by the City.2

This statement suggests that the liquidated damages clause was meant to compensate for loss that might be incurred rather than to penalize.

Other testimony by Durkin indicated that the liquidated damages clause was intended to penalize for late performance rather than to compensate the City for injury it would incur as a result of late performance. The deposition of Durkin reads in pertinent part:

Q: Well, did you give them any instructions to insure that those provisions would be included in the contract?

A: I didn’t originate those figures, other than the fact that I knew that there were penalty clauses in the contract. The specifics came from—

Q: And by penalty clause, you refer to those three?

A: That’s what I would consider penalty.

Q: And by penalty what do you mean, doctor, basically what is here?

A: That’s my interpretation of penalty, that if the modular classrooms were not in place on time and accepted by the city, that there would be these assessments made against the provider.

Q: To penalize the contractor for his late performance?

A: I think more to encourage the contractor to deliver the modulars on time and to meet the provisions of the contract.

Q: So to provide a financial incentive to the contractor to finish the units on time?

A: I believe was the motivating factor, yes.

Q: That was the reason that those were put in as far as you know?

A: I think it was to motivate them and let them know if they were not, we would impose a penalty.

*20When asked in his deposition about the purposes of the liquidated damages provision, John C. Orrell, purchasing agent for the City, replied:

A: At the intitiation of the preparation of the bid documents, we, of course, discussed the very crucial elements of the bid documents. Contained within those elements were the provisions for the liquidated damages.

Because of the severe overcrowding in the Worcester Public Schools, it was concluded that it would be imperative that we have some sort of liquidated damages provision in the contract to be certain that the project was completed on time.

Orrell did not recall how the amount of liquidated damages had been determined, but he remembered that a main function of the provision was to serve as an incentive for Space Master to finish its work on time.

In light of the contradictory and ambiguous statements, there was a genuine issue of material fact as to whether the City intended the liquidated damages provision to provide reasonable compensation or impose a penalty in the event of Space Master’s breach. The grant of Space Master’s motion for summary judgment was error.

For the reasons already stated, we affirm the district court’s denial of defendant’s motion for partial summary judgment on the liquidated damages clause.

Reversed in part, affirmed in part. Remanded for trial.

Costs on appeal to the City.

OPINION OF THE COURT

Per Curiam.

The issue in this appeal is whether a plaintiff, in an action *260for breach of contract, may recover loss of prospective profits for its contemplated 20-year operation of a domed stadium which was to be constructed by defendant County of Erie (County).

On August 8, 1969, pursuant to a duly adopted resolution of its legislature, the County of Erie entered into a contract with Kenford Company, Inc. (Kenford) and Dome Stadium, Inc. (DSI) for the construction and operation of a domed stadium facility near the City of Buffalo. The contract provided that construction of the facility by the County would commence within 12 months of the contract date and that a mutually acceptable 40-year lease between the County and DSI for the operation of said facility would be negotiated by the parties and agreed upon within three months of the receipt by the County of preliminary plans, drawings and cost estimates. It was further provided that in the event a mutually acceptable lease could not be agreed upon within the three-month period, a separate management contract between the County and DSI, as appended to the basic agreement, would be executed by the parties, providing for the operation of the stadium facility by DSI for a period of 20 years from the completion of the stadium and its availability for use.

Although strenuous and extensive negotiations followed, the parties never agreed upon the terms of a lease, nor did construction of a domed facility begin within the one-year period or at any time thereafter. A breach of the contract thus occurred and this action was commenced in June 1971 by Kenford and DSI.

Prolonged and extensive pretrial and preliminary proceedings transpired throughout the next 10 years, culminating with the entry of an order which affirmed the grant of summary judgment against the County on the issue of liability and directed a trial limited to the issue of damages (Kenford Co. v County of Erie, 88 AD2d 758, lv dismissed 58 NY2d 689). The ensuing trial ended some nine months later with a multimillion dollar jury verdict in plaintiffs’ favor. An appeal to the Appellate Division resulted in a modification of the judgment. That court reversed portions of the judgment awarding damages for loss of profits and for certain out-of-pocket expenses incurred, and directed a new trial upon other issues (Kenford Co. v County of Erie, 108 AD2d 132). On appeal to this court, we are concerned only with that portion *261of the verdict which awarded DSI money damages for loss of prospective profits during the 20-year period of the proposed management contract, as appended to the basic contract. That portion of the verdict was set aside by the Appellate Division and the cause of action dismissed. The court concluded that the use of expert opinion to present statistical projections of future business operations involved the use of too many variables to provide a rational basis upon which lost profits could be calculated and, therefore, such projections were insufficient as a matter of law to support an award of lost profits. We agree with this ultimate conclusion, but upon different grounds.

Loss of future profits as damages for breach of contract have been permitted in New York under long-established and precise rules of law. First, it must be demonstrated with certainty that such damages have been caused by the breach and, second, the alleged loss must be capable of proof with reasonable certainty. In other words, the damages may not be merely speculative, possible or imaginary, but must be reasonably certain and directly traceable to the breach, not remote or the result of other intervening causes (Wakeman v Wheeler & Wilson Mfg. Co., 101 NY 205). In addition, there must be a showing that the particular damages were fairly within the contemplation of the parties to the contract at the time it was made (Witherbee v Meyer, 155 NY 446). If it is a new business seeking to recover for loss of future profits, a stricter standard is imposed for the obvious reason that there does not exist a reasonable basis of experience upon which to estimate lost profits with the requisite degree of reasonable certainty (Cramer v Grand Rapids Show Case Co., 223 NY 63; 25 CJS, Damages, § 42 [b]).

These rules must be applied to the proof presented by DSI in this case. We note the procedure for computing damages selected by DSI was in accord with contemporary economic theory and was presented through the testimony of recognized experts. Such a procedure has been accepted in this State and many other jurisdictions (see, De Long v County of Erie, 60 NY2d 296). DSI’s economic analysis employed historical data, obtained from the operation of other domed stadiums and related facilities throughout the country, which was then applied to the results of a comprehensive study of the marketing prospects for the proposed facility in the Buffalo area. The quantity of proof is massive and, unquestionably, represents business and industry’s most advanced and sophisticated *262method for predicting the probable results of contemplated projects. Indeed, it is difficult to conclude what additional relevant proof could have been submitted by DSI in support of its attempt to establish, with reasonable certainty, loss of prospective profits. Nevertheless, DSI’s proof is insufficient to meet the required standard.

The reason for this conclusion is twofold. Initially, the proof does not satisfy the requirement that liability for loss of profits over a 20-year period was in the contemplation of the parties at the time of the execution of the basic contract or at the time of its breach (see, Chapman v Fargo, 223 NY 32; 36 NY Jur 2d, Damages, §§39, 40, at 66-70). Indeed, the provisions in the contract providing remedy for a default do not suggest or provide for such a heavy responsibility on the part of the County. In the absence of any provision for such an eventuality, the commonsense rule to apply is to consider what the parties would have concluded had they considered the subject. The evidence here fails to demonstrate that liability for loss of profits over the length of the contract would have been in the contemplation of the parties at the relevant times.

Next, we note that despite the massive quantity of expert proof submitted by DSI, the ultimate conclusions are still projections, and as employed in the present day commercial world, subject to adjustment and modification. We of course recognize that any projection cannot be absolute, nor is there any such requirement, but it is axiomatic that the degree of certainty is dependent upon known or unknown factors which form the basis of the ultimate conclusion. Here, the foundations upon which the economic model was created undermine the certainty of the projections. DSI assumed that the facility was completed, available for use and successfully operated by it for 20 years, providing professional sporting events and other forms of entertainment, as well as hosting meetings, conventions and related commercial gatherings. At the time of the breach, there was only one other facility in this country to use as a basis of comparison, the Astrodome in Houston. Quite simply, the multitude of assumptions required to establish projections of profitability over the life of this contract require speculation and conjecture, making it beyond the capability of even the most sophisticated procedures to satisfy the legal requirements of proof with reasonable certainty.

The economic facts of life, the whim of the general public *263and the fickle nature of popular support for professional athletic endeavors must be given great weight in attempting to ascertain damages 20 years in the future. New York has long recognized the inherent uncertainties of predicting profits in the entertainment field in general (see, Broadway Photoplay Co. v World Film Corp., 225 NY 104) and, in this case, we are dealing, in large part, with a new facility furnishing entertainment for the public. It is our view that the record in this case demonstrates the efficacy of the principles set forth by this court in Cramer v Grand Rapids Show Case Co. (223 NY 63, supra), principles to which we continue to adhere. In so doing, we specifically reject the "rational basis” test enunciated in Perma Research & Dev. Co. v Singer Co. (542 F2d 111, cert denied 429 US 987) and adopted by the Appellate Division.

Accordingly, that portion of the order of the Appellate Division being appealed from should be affirmed.

Chief Judge Wachtler and Judges Meyer, Alexander, Titone and Kane* concur in Per Curiam opinion; Judges Simons, Kaye and Hancock, Jr., taking no part.

Order insofar as appealed from affirmed, with costs.