What is the value of the contract? Calculating the value of a partially executed business contract

In this case, the charging party, the plaintiff, alleges that that the defendant unlawfully suspended a work contract.  The plaintiffs had a $10.5 million, 3 year contract with the defendant to install and maintain machinery at a pipe manufacturing facility.

The plaintiff alleges that after the defendant unlawfully solicited and hired its key employee to come and work for the defendant, the defendant then terminated the contract.  The plaintiff further alleges that the defendant used the former employees of the plaintiff, and the confidential knowledge that they possessed, to complete the install and maintenance of the multimillion dollar pipe making machinery. The plaintiffs financial records indicated that had performed about 1/3 of the work spelled out in the business contract.

In this instance, the value of the remaining portion of the contract is calculated under two different ‘but-for’ contract breach scenarios.  The but-for scenario calculates the profits that the plaintiff would have received but-for the defendant’s alleged breach of contract.

In the first but-for scenario, the profit from the remaining portion of the business contract is calculated as the lost profit from the remaining items of spelled out in the contract.  The lost profit is determined by calculating the estimated revenue from the remaining items and subtracting the expected incremental cost associated with the performance of the contract.

In the second but-for scenario, the after-incremental expense profits are calculated based on the items that were actually installed by the vendors that the defendant utilized following the termination of the contract with the plaintiff.