Loss Counterfactuals

Abstract Private law uses counterfactual reasoning to determine if loss—for which compensatory damages may be awarded—has been suffered because of a wrong: is the claimant in a worse position than it would have been in without the wrong? Counterfactual reasoning is, therefore, an essential part of private law. Yet, it is far from clear what this counterfactual for determining loss is. Different counterfactuals seem to be used, depending on the claim and the claim’s circumstances. Counterfactuals remain, in general, an undertheorised concept. This article proposes a new, principled theory, and conceptualisation, of counterfactuals in private law. Its central claim is that, as a rule, the counterfactual for determining loss is, and should be, ‘what would have happened without the wrong’, but that there are, and should be, exceptions to this rule, if normatively justifiable.