Damages Calculation & Economic Analysis Flashcards

In a lost profits analysis, the 'but-for' scenario represents:

Answer: The plaintiff's expected performance absent the defendant's wrongful conduct

The but-for scenario models what the plaintiff's financial performance would have been if the defendant had not engaged in the wrongful conduct.

When calculating the present value of future lost profits, the discount rate used should reflect:

Answer: The risk associated with the projected cash flows

The discount rate must reflect the risk inherent in the specific projected cash flows being valued, not a generic market rate.

The 'new business rule' in lost profits litigation historically held that a new business could not recover lost profits because:

Answer: Its future profits were considered too speculative to establish with reasonable certainty

Courts traditionally denied new businesses lost profits claims due to the speculative nature of unproven future earnings, though many jurisdictions have relaxed this rule.

In an unjust enrichment claim, the damages measure focuses on:

Answer: The benefit conferred on the defendant, not the plaintiff's actual loss

Unjust enrichment damages disgorge the benefit wrongfully obtained by the defendant, regardless of whether the plaintiff suffered an equivalent loss.

A plaintiff seeking damages for breach of contract has a duty to:

Answer: Mitigate damages by taking reasonable steps to reduce losses

The mitigation doctrine requires plaintiffs to take reasonable steps to minimize their damages; failure to mitigate reduces the recoverable amount.

The 'yardstick' or 'comparable business' method for estimating lost profits involves:

Answer: Comparing the plaintiff's performance to that of similar businesses unaffected by the defendant's conduct

The yardstick method benchmarks the plaintiff's expected performance against comparable businesses to estimate what profits would have been absent the wrongful conduct.