Lost profits
Definition
The net income the claimant would have earned during the damages period but for the defendant's wrongful conduct. It focuses on the victim's loss and typically requires projecting the but-for revenue, deducting avoided costs, and discounting to present value.
Related terms
- Avoided costs
- The costs the claimant did not incur because the wrongful conduct interrupted operations. In a lost-profits calculation, avoided variable costs are deducted...
- But-for scenario
- The hypothetical financial position the claimant would have been in had the wrongful conduct not occurred. The damages figure is the difference...
- Diminution in value
- The reduction in the market value of a business or asset attributable to the defendant's conduct. Used when lost profits are not...
- Discount rate
- The rate used to convert future projected cash flows to their present value. It reflects the time value of money and the...
- Unjust enrichment
- A damages measure that focuses on the benefit the defendant gained from the wrongful conduct rather than the loss the claimant suffered....
Explained in
- Damages QuantificationThe net income the claimant would have earned during the damages period but for the defendant's wrongful conduct. It focuses on the victim's loss and typically...