Lost Profits Rule

The Lost Profits Rule is a legal principle used to determine damages in cases where a business claims it lost profits due to another party’s wrongful act, like breach of contract or negligence. It requires the injured party to show that the lost profits were direct, foreseeable results of the wrongful conduct, and they can reasonably estimate these profits with reliable evidence. Essentially, it helps quantify the financial harm suffered by projecting what the business’s earnings would have been if the wrongful act hadn’t occurred, ensuring fair compensation for the actual economic loss.