Description of the legal term Mitigation of Damages:
Mitigation of damages is a legal principle which imposes a duty on parties who have suffered loss as a result of a breach of contract or tort to take reasonable steps to reduce or minimize the damages incurred. It operates under the rationale that the law should encourage the injured parties not to sit idly by and allow their losses to accumulate when steps could be taken to avoid or diminish the damage.
In the context of contract law, when a breach occurs, the non-breaching party has the duty to mitigate the damages that they could suffer as a result of the breach. They are not allowed to recover damages for losses that could have been avoided by reasonable efforts. The mitigating party is expected to act reasonably and not in a speculative manner.
The principle does not require the injured party to take extraordinary measures or to incur substantial expenses in mitigating their damage. What constitutes ‘reasonable steps’ depends on the circumstances of each case, taking into account various factors such as the nature of the breach, the type of damage and the surrounding market conditions.
Furthermore, in the realm of tort law, this principle applies similarly. The injured party is expected to take reasonable steps to minimize the damage caused by the defendant’s wrongful act. If a claimant fails to mitigate their damages, the compensation awarded can be reduced accordingly.
The burden of proof lies with the party who breached the contract or committed a tort to demonstrate that the injured party has failed to mitigate their damages. If successful, the amount of damages awarded to the claimant can be reduced by the court.
Mitigation is especially pertinent where damages are being calculated. In cases where there are straightforward measures that could have been taken to limit the damage suffered, courts are likely to reduce the damages payable. However, there is no duty to mitigate if it would be unreasonable to expect the injured party to take such steps, either because they are impractical or excessively burdensome.
Legal context in which the term Mitigation of Damages may be used:
Consider a scenario where an employer wrongfully terminates an employee’s contract without giving the requisite notice or pay. The employee is expected to seek new employment to mitigate losses, which represent lost wages. If the employee chooses not to look for new work, or turns down a comparable job offer without a valid reason, they may not be able to claim for damages that could have been avoided. However, if the employee makes reasonable efforts to find a new job but is unable to secure employment due to market conditions or skill mismatches, they may still claim for a period of lost wages, since they have fulfilled their duty to mitigate.
Another example pertains to a lease agreement where a tenant abandons the property before the end of the lease term, causing loss of rental income to the landlord. The landlord is required to make reasonable efforts to find a new tenant. If the landlord fails to do so, and the property remains unoccupied, the original tenant may argue that the landlord did not mitigate the loss and therefore, should not be able to recover the full rental value that would have been collected for the remainder of the lease term.
The application of the principle of mitigation is fundamental within the British judicial system. It ensures that loss is contained, and it serves as a reminder to all parties that after an incident causing damage, proactive and reasonable steps must be taken to prevent unnecessary economic waste. It promotes fair and balanced outcomes in the pursuit of justice, reflecting not only the protection of those wronged but also the rational behavior expected of them following the wrong.
