Can You Claim Damages for Lost Profits in Korea?

Short Answer

Yes. Under Korean law, a party may claim lost profits as part of damages for breach of contract, tort, or other legally recognized wrongful conduct.

However, lost profit damages are often more difficult to recover than direct financial losses. The claimant must show legal liability, causation, foreseeability, and a reasonable basis for calculating the amount of lost profits.

---

What Are Lost Profits?

Lost profits refer to the profits that would likely have been earned if the defendant's wrongful conduct had not occurred.

In Korea, lost profits are typically understood as a form of expected profits or lost earnings. They are different from direct losses, such as unpaid invoices, repair costs, or money already spent.

Examples may include:

• Profits from cancelled sales
• Income lost because production was interrupted
• Profits from a project that could not be completed
• Business opportunities lost due to a contractual breach
• Expected profits under an existing supply or service contract

Importantly, lost profits generally refer to net profits, not simply gross revenue.

---

Can Lost Profits Always Be Recovered?

No.

The fact that a breach occurred does not automatically mean that lost profits will be awarded.

Korean courts generally require the claimant to establish:

• The defendant's legal liability
• Causation between the wrongful conduct and the lost profits
• That the loss falls within the legally recoverable scope of damages
• A reasonable basis for calculating the amount of loss

Damages are generally limited to ordinary damages. Special damages may require proof that the defendant knew or should have known the relevant special circumstances.

---

How Can Lost Profits Be Proven?

The strongest lost profit claims are usually supported by objective business records, not estimates alone.

Useful evidence may include:

• Past financial statements
• Sales records
• Purchase orders
• Customer contracts
• Accounting records
• Cost and margin records
• Market data
• Production capacity records
• Expert reports, where appropriate

The claimant should ideally show a clear but-for scenario: what would probably have happened if the wrongful conduct had not occurred.

---

What If the Exact Amount Is Difficult to Prove?

Lost profits often involve future or hypothetical business outcomes, so proving the exact amount may be difficult.

If the fact of loss is established but the exact amount is inherently difficult to prove, Korean courts may determine a reasonable amount based on the overall record.

However, this does not mean the court will accept speculative figures. The claimant still needs objective anchors, such as past performance, confirmed orders, normal profit margins, production capacity, or comparable market data.

---

Can Future Profits Be Claimed?

Sometimes.

Future profits may be recoverable if there is a reasonable and objective basis to conclude that they would probably have been earned.

For example, profits expected under an existing long-term contract may be easier to prove than profits based on a purely speculative future opportunity.

Courts generally distinguish between reasonably expected profits and mere speculation.

---

Will the Court Award the Full Amount Claimed?

Not necessarily.

Even where liability is established, the court may determine that only part of the claimed lost profits has been sufficiently proven.

For example, the court may find that:

• Some losses were caused by other market factors
• The claimant failed to reduce or mitigate the loss
• The claimed amount is based on gross revenue rather than net profit
• The evidence does not sufficiently support the claimed period, margin, or volume

As a result, the final damages awarded may be lower than the amount originally claimed.

---

What Should You Do Before Filing a Claim?

Before claiming lost profits, parties should carefully organize documents supporting both the fact of loss and the amount of loss.

This may include:

• Financial records
• Contracts and purchase orders
• Sales history
• Cost and margin data
• Customer correspondence
• Business forecasts prepared before the dispute
• Documents showing how the defendant's conduct affected the business

Preparing this evidence at an early stage can significantly strengthen a claim for lost profits.

---

Key Takeaways

• Lost profits may be recoverable under Korean law.
• Lost profits generally refer to net profits, not gross revenue.
• The claimant must prove liability, causation, foreseeability, and amount.
• Courts generally require objective evidence, not speculation.
• If the exact amount is difficult to prove, the court may determine a reasonable amount based on the overall record.
• Well-prepared financial and business records are often critical.

---

Conclusion

Claims for lost profits are often more complex than claims for direct financial losses.

While Korean law allows recovery in appropriate cases, success depends largely on whether the claimant can present credible, objective, and well-supported evidence showing that the profits would probably have been earned but for the defendant's wrongful conduct.

---