Total-Offset Rule Law and Legal Definition

Total offset rules is a principle of torts law that proposes that interest rates and rates of inflation are self-adjusting, and that they totally offset each other. According to this rule, the eroding effect of inflation offsets the accrual of interest on an award and makes it unnecessary to discount future damages to their present value.

The following is an example of a case law on the rule:

The total offset rule assumes that the rate of inflation will cancel out the discount rate and thus does not permit any alteration of a damage award. The assumption that inflation will offset the interest earned on a lump sum award applies to lost future commissions just as it applies to other lost future income. [Bloomfield Fin. Corp. v. National Home Life Assur. Co., 734 F.2d 1408 (10th Cir. Colo. 1984)]