I noticed this post by Paul Stanfield on the Austin Technology Law Blog. The main point it makes is that if a customer wants to exclude “lost profits” from the damages that you, the seller, might be entitled to under a contract, you should make it clear in the contract that “lost profits” refers to profits on collateral business arrangements, not the profits that you expect to earn on that contract.
That might seem obvious, and even if a contract doesn’t address the issue directly a court might conclude that that’s the intended meaning. But winning a fight is a distant second to not having the fight at all.
How to handle “lost profits” is, of course, a subset of the bigger can of worms that is consequential damages. For more about that, see this March 2010 post on the AdamsDrafting blog.
