Following this introduction, Part II explores the nature and purposes of prejudgment interest, focusing on the role that prejudgment interest plays in a claimant's remedy or damage award and exploring the historical distinction between liquidated and unliquidated claims. Part III builds on this historical distinction by examining two different approaches for calculating prejudgment interest where a meritorious liquidated claim is countered by a meritorious unliquidated counterclaim: (1) the Washington rule, also known as the interest on the entire claim or interest on the whole rule; and (2) the interest on the balance rule and its slight variation in California, which focuses on the distinction between a "payment" and a "discount". Based on those rules, Part IV argues that (1) Washington's continued reliance on Mall Tool Co. v. Far West Equip. Co., which applied the interest on the whole rule except in a very narrow situation, leads to unjust results in many cases; and (2) the interest on the balance rule is the better reasoned approach. Finally, Part V concludes that Washington should replace the rule established in Mall Tool Co. with the interest on the balance rule for awarding and calculating prejudgment interest, thereby making interest on the whole the exception rather than the rule.
Aric Jarrett, Full Compensation, Not Overcompensation: Rethinking Prejudgment Interest Offsets in Washington, 30 SEATTLE U. L. REV. 703 (2007).