The short answer
Lost profits are earnings you would have made if the other side had performed. Consequential damages are losses that flow indirectly from a breach, such as lost customers or downstream contracts. Both can be recoverable, but they are the hardest damages to prove and the most frequently waived by contract.
Why it matters
Lost profits are often the largest part of a business claim. They are also where many claims shrink, either because of a contractual waiver or because the proof is too speculative.
Where it fits in your case
Whenever a breach disrupts revenue, such as a canceled supply contract, a failed software rollout, or a lost distribution deal.
What to expect
Reasonable certainty. You must show with reasonable certainty that the profits would have been earned and how much they would have been.
New ventures. Profits for a new business or product are harder to prove because there is less history to rely on.
Foreseeability. The loss must have been a foreseeable result of the breach when the contract was made.
Contract waivers. Many contracts exclude consequential damages or lost profits. Whether a particular loss counts as excluded can itself be disputed.
Experts. Larger claims usually require an accountant or economist to build and defend the numbers.
What to do now
Preserve historical financial records and projections.
Identify specific customers, orders, or contracts that were lost.
Read any damages waiver carefully before assuming the claim is barred.
Avoid inflating projections; credibility drives the outcome.
What we need from you
The contract, two to three years of financial statements, sales records, and evidence of specific lost business.
Common misconceptions
“Our projections prove our lost profits.” Projections need a reliable basis and evidence.
“A consequential damages waiver bars every claim for lost profits.” Not necessarily. It depends on the wording and the nature of the loss.