In commercial law, there are cases where a plaintiff wins the principle of their case but ends up with less compensation than they had hoped. One common example is the sudden termination of long-term business relationships. Many companies, after proving that the relationship had been stable and that the notice period given was insufficient, often find their compensation claims significantly reduced or even rejected. This is due to the lack of clear guidelines on how to calculate the damage caused by such abrupt terminations. Article L442-1, II of the Commercial Code, introduced by ordinance No. 2019-359 of April 24, 2019, states that the party responsible for the sudden termination must repair the damage caused, but it does not specify how this damage should be measured. As a result, legal interpretations and court rulings have established a method for calculating compensation, which is now applied by specialized courts, particularly the Paris Court of Appeal, which is the only one competent in appeals. The method used by courts is based on a key principle in civil liability law: neither loss nor profit. The victim must be placed in the situation they would have been in if the proper notice period had been given. This means that the compensation should not make them better off than they would have been, nor should it leave them worse off. This principle leads to a detailed accounting process, where each component of the calculation can either increase or decrease the compensation amount. The damage is not about the loss of the business partner but about the inability to reorganize due to the lack of proper notice. However, this principle has a limitation: if the partner committed serious breaches, the terminating party may not need to give any notice. The Court of Cassation has clarified that even in such cases, the terminating party can still choose to provide a notice period, but the alleged faults must be of sufficient gravity to justify an immediate termination. In June 2023, the Commercial, Financial, and Economic Chamber of the Court of Cassation issued a ruling that clarified the method of calculating damage caused by abrupt termination. The ruling defined the main damage as the difference between the expected tax-exempt turnover and the tax-exempt variable costs not borne during the period of insufficient notice. This approach, known as the gross margin, is similar to the variable cost margin used in management accounting. This method was also applied to cases of partial termination, where the partner reduces their orders rather than ending the relationship. The damage is assessed based on the decrease in the expected gross margin during the notice period, not by comparing it to zero. The calculation is based on the situation at the time of the termination, not when the judge rules, which means that any new contracts the victim may have signed after the termination are not considered. The compensation is calculated using a formula that compares the hypothetical margin the victim could have achieved if the termination had not occurred with the actual margin they achieved during the notice period. The formula used by the Paris Court of Appeal is: Compensation = Average Monthly Tax-Exempt Turnover × Variable Cost Margin Rate × Number of Months of Notice Avoided. For example, a supplier with an average monthly turnover of 50,000 euros and a variable cost margin rate of 30 percent, who was terminated with a four-month notice period instead of twelve, would be entitled to a compensation of 120,000 euros. However, this amount can be reduced if the defense successfully argues for a lower margin rate or excludes an unusually favorable year. The three main components of the formula—average monthly turnover, variable cost margin rate, and number of months of notice avoided—are key points of contention in legal disputes. Each of these variables can be strategically challenged or supported, making them crucial in the determination of compensation.