Using Lost Profit in Order to Measure Economic Damages
When you are running a business, then the economic cost of such an unlawful act can surely put you out of the business. For example, the breach of contract may impact the business. There can also be lost profit which is usually the very appropriate way in measuring commercial damages.
The other measures of such commercial damage would include unjust enrichment, lost value, contract damages, the fraudulent conveyance and also such reasonable royalties. They are methods of measuring the damages which you can be entitled to or that amount of money to be paid to you like the compensation for a loss.
The economic damages, as well as the lost profit analysis techniques utilized, would include the before-and-after method. In order to measure such an economic cost of the business interruption, then you have to estimate the revenue lost versus the savings in the cost when your business got interrupted.
There is also the before-and-after method. There are those expenses such as the equipment rent, leases, and interest which will perhaps continue to be incurred in this period. There are also other things such as the commissions being paid to the sales staff won’t be incurred. There can also be additional costs which are associated with the business interruption. You can have those expenses which are also related to renting such a temporary facility too. Or you may have those costs which are related to fixing such cause of the business interruption. You will have to deduct these from the costs saved in order to get the next expenses that you have saved. Then, you will have to subtract such from the lost revenue to know your lost profits for a certain period. This must be done by the economic damages exert so that you know where you actually stand before going to court.
Discounting of such figures in order to present value and mitigation should also be done. The date for doing such a discounting can also differ. In some situations, it could be the date from that business interruption. Well in others, it could actually be the date from the beginning of the court proceedings. There is also such prejudgment interest which could vary in amount as well.
Well, you should also know that there are other methods that you may use. There is the yardstick or that comparable company method in which the same companies or the industries that may be compared to yours are being identified. The information regarding their profits would be used to project the profits as done by the expert. One will make use of this method when there is actually no historical information that is related to the company is made available.
The variables related to the company, the industry where your business belongs and also the overall economy must also be taken into consideration in the economic damages and also the lost profit analysis.
Well, you only have to work with an accredited, knowledgeable and experienced expert. One should also be updated with the methods.