Prepared by: Meshaal Sulaiman Alrubaysh Law Firm & Legal Consultancy
Professional Profile: Meshaal Sulaiman Alrubaysh
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Illustrative photograph by Joachim Schnürle Unsplash
A supplier’s delay or a disrupted project may cost a business opportunity. A compensation claim might begin with projected sales, but lost profit requires deeper analysis: what would have happened without the breach, which costs were necessary to earn the revenue and what other causes could affect the result?
Identify the basis of liability
Contractual breach and a harmful act require different analysis, with their respective conditions and defences. The Civil Transactions Law provides for repairing harm; Article 137 addresses loss and missed gain when they are natural consequences of a harmful act under its conditions. Establish the event creating liability, harm and causation, and examine the contract, notice requirements and applicable exceptions.
Calculate return after its costs
Distinguish expected revenue from lost gain. Examine materials, operations, shipping and other costs that would have been incurred, then disclose assumptions, figure sources and the affected period. Historical records, customer orders, confirmed contracts and operating capacity assist assessment. A forecast alone needs support showing likely realization and its link to the harm. Complex calculations may require an expert.
Connect each amount to a clear cause
Did the breach actually cause the customer loss or operating stoppage, or did stock shortages, weak demand or licensing delays also contribute? Define the affected period and avoid overlapping compensation for the same harm. Review reasonable mitigation: the law considers whether reasonable effort could have avoided harm and the injured party’s contribution to its occurrence or increase, as applicable.
Contractual compensation has important limits
Where compensation is not fixed by the contract or a statutory provision and the court assesses it, Article 180 links assessment to statutory rules and, for contractual obligations where the debtor committed neither fraud nor gross fault, limits liability to harm ordinarily foreseeable when contracting. Pre-contract correspondence may show the purpose, deadlines and delay consequences known to the other party. Any agreed compensation or liability limit requires examination of validity and scope rather than an assumption that the clause settles the dispute.
Build a file that can be audited
Provide a reproducible calculation, distinguishing established facts from assumptions needing verification. This assists evaluation of a claim or settlement and allows objections to be addressed practically.
- Evidence of breach, the chronology and affected period.
- Evidence of expected revenue, costs and capacity to perform.
- Mitigation steps and a calculation avoiding duplication.
Fictional example
In a fictional example, a manufacturer alleges loss of an order because a part arrived late. It provides the order, cancellation date, capacity records and costs, and investigates an alternative and why it was not used. Assessment rests on evidence and calculation, without automatically equating the order’s value with recoverable compensation.
Build a lost-profit claim through coordinated legal and accounting analysis. The file’s strength lies in proving the harm and its limits; the court assesses compensation under the facts and applicable rules.
Official Sources
General educational content, not a substitute for advice on your facts and documents, and not a guarantee of any outcome.
Translations refer to Saudi law, consult the official legal text when applying it.
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