Lost volume seller

A lost volume seller is a term that arises in the law of contracts to describe a party whose capacity to produce the items sold is sufficient to meet the demands of all customers who seek to buy those items. Therefore, the failure to make one sale reduces the seller's profits by the amount of that one sale. This term arises in lawsuits where a party breaches a contract to purchase such an item. Simply the Seller has an inexhaustible supply of goods.

For example, suppose that a t-shirt maker has 100 t-shirts. If a customer agrees to buy a shirt from the seller, and then breaches that agreement (i.e. refuses to make the purchase), the seller will likely be able sell the shirt at the same price to the next customer who walks in. Therefore the seller has lost no actual profits.

However, if that seller has the ability to manufacture a brand new shirt for each customer that walks in, then the customer who breaches the agreement to buy has thereby prevented the seller from earning profits that the seller would have earned, had the agreement been honored.

Because of this, courts are willing to award expected profits to a lost volume seller, even though another merchant who was "not" a lost volume seller might not be entitled to any damages for such a breach.

See "Neri v. Retail Marine Corp.", 285 N.E.2d 311 (N.Y. 1972) and UCC §2-708(2).