CIV § 3301

Lost profits must be clearly ascertainable - CIV § 3301

CIV § 3301 bars recovery of contract damages that are not clearly ascertainable in nature and origin. Lost profits that are speculative are not recoverable.

Official text CIV § 3301 — California

No damages can be recovered for a breach of contract which are not clearly ascertainable in both their nature and origin.

Text as published in the 2026 snapshot of the code.

Source: Vaquill Open US Law, compiled from official state publishers (huggingface.co), reproduced under license CC BY 4.0.

Read this provision at the official source →

What it actually says

Section 3301 is a single limit on contract damages: no damages can be recovered for a breach of contract which are not clearly ascertainable in both their nature and their origin. Both halves have to be satisfied, and they ask different questions.

"Nature" is about what the loss is and whether it can be measured. A loss that cannot be quantified on any rational basis is not recoverable, however genuine — which is the obstacle facing claims for lost goodwill, for the value of an opportunity that never existed in a form anyone can price, or for disappointment. "Origin" is about where it came from: the loss has to be traceable to the breach rather than to the market, to the claimant's own choices, or to a cause that would have operated anyway.

The word "clearly" is not a demand for arithmetic certainty. California law distinguishes the fact of damage, which must be established with reasonable certainty, from the amount, which may be estimated on reasonable evidence once the fact is proved. A new business with no trading history claiming lost profits usually founders on this section; an established business with accounts often does not. Section 3301 sits alongside the other limits on contract recovery — § 3300's measure and its foreseeability requirement, and § 3358's rule that no one may recover more than they would have gained by full performance — and it is one of the reasons contract claims recover less than tort claims on the same facts, where § 3333 allows all detriment proximately caused whether anticipated or not. Whether a particular head of loss is ascertainable enough is an evidential judgement to make with a lawyer before it is pleaded.

When it applies

A claim for profits a new venture would supposedly have made
Lost business said to have followed a supplier's failure
A claim for the value of an opportunity that never got off the ground
Damage to reputation asserted after a contract went wrong
The other side arguing your figures are speculative
A loss that could equally have been caused by the market

What this section does not say

It does not require exact arithmetic. The fact of damage must be reasonably certain; the amount may be estimated on reasonable evidence once that is established.
It does not apply to tort claims. Damages for a non-contractual wrong are measured by § 3333, which allows all detriment proximately caused whether or not it could have been anticipated.
It does not bar consequential losses as such. A consequential loss that is measurable and traceable to the breach is not excluded by this section.
It is not the foreseeability rule. Whether a loss was within the parties' contemplation is a separate limit, and a foreseeable loss can still fail this section for being unascertainable.
It does not cap what is recoverable. That is § 3358, which prevents recovery of more than full performance would have produced.

Worked examples

Invented situations, written to show how the wording bites. They are not real cases, not judgments and not precedent, and nothing here predicts what would happen in yours.

Illustrative example

A small manufacturer's supplier fails to deliver, and the manufacturer claims a year of lost growth based on a projection prepared for a funding round.

How the wording applies

Section 3301 excludes damages that are not clearly ascertainable in both their nature and their origin. It turns on the evidence for the fact of loss rather than on arithmetic precision: cancelled orders with named customers and dated invoices are ascertainable, while a growth curve drawn for investors is exactly the kind of figure the section is aimed at.

How the parties settled it

The supplier credits the cost of the substitute purchases actually made and waives the balance of the account, with nothing paid for projected growth.

Illustrative example

A business that had not yet opened claims the profits it would have made had a fit-out been finished on time.

How the wording applies

A venture with no trading history faces the fact-of-loss problem head on, because there is nothing from which the loss can be traced. The fact this hinges on is whether there is any objective anchor, such as signed customer contracts, a comparable existing branch or pre-booked bookings, since without one the claim is unascertainable however genuine the disappointment.

How the parties settled it

The contractor refunds an agreed part of the fee for the delay period and completes the outstanding items by a fixed date, with a fixed sum agreed in advance for any further slippage.

Related sections

CIV § 3333 Full Compensation for All Detriment Caused | CIV § 3333 CIV § 1717 One-sided attorney fee clauses are reciprocal, CIV § 1717 CIV § 1671 Liquidated damages valid unless unreasonable - CIV § 1671

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We copy this text from the official publisher and re-check it against that source on every page load, but we cannot guarantee it is complete, current or free of error, and we accept no liability for any reliance on it. An amendment can take effect before a consolidation catches up. The publisher's own copy is linked below; where the two differ, it is the official one that counts.

This page reproduces the text of CIV § 3301 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in California.

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