Torts II

Reduce to Present Value

An award for future damages must be awarded as a definite lump sum amount set at the time of the judgment.

There are three ways of reducing to present value:

1. Inflation-discount method
   • Accounts for interest and inflation separately.
2. Real interest method
   • Sets a flat interest rate approximating the practical rate.
   • Based on the principal that overpaying the plaintiff is better than underpaying him.
3. Total offset method
   • Says that interest and inflation will cancel each other out and just pays the actual awarded amount.