Vitex Manufacturing Corp. v. Caribtex Corp.
United States Court of Appeals for the Third Circuit
377 F.2d 795 (1967)
Vitex (plaintiff), which had closed its Virgin Islands fabric-processing plant due to falling demand, reopened it, rehired staff, and prepared to perform after contracting with Caribtex (defendant) to process woolen materials; Caribtex then failed to deliver the promised materials, and Vitex sued for lost profits. The district court calculated damages at $21,114 by subtracting the costs Vitex would have incurred processing the materials from the gross profits it would have earned, and Caribtex appealed, arguing Vitex's overhead expenses should also have been deducted from gross profits in calculating those damages.
Whether, in calculating damages for breach, overhead expenses should be treated as costs deducted from the gross profits and consequently from the damages award.