Mitigating damages refers to the obligation of a party who has suffered loss or injury (the "injured party") to minimize or reduce the extent of those damages following a breach of contract or a tort (civil wrong). The principle is rooted in both contract law and tort law and is designed to ensure fairness in legal disputes. Here’s a detailed explanation of what it entails:
Key Aspects of Mitigating Damages
Legal Obligation:
- The injured party has a duty to take reasonable steps to prevent further loss or damage after the initial harm has occurred. Failing to do so could result in a reduction of the damages they may be entitled to recover.
Reasonableness:
- The actions taken to mitigate must be reasonable. This means the injured party is not required to take extreme or overly burdensome actions. For example, if continuing to perform a contract would cause additional losses that are deemed unreasonable, the injured party does not have to proceed with that performance.
Types of Mitigation:
- In Contract Law: If a party breaches a contract, the non-breaching party must take steps to avoid additional losses that could arise from the breach, such as finding alternative suppliers or mitigating financial losses.
- In Tort Law: In cases of negligence, an injured party must take reasonable care to minimize their injuries or damages that resulted from the negligent act.
Burden of Proof:
- The defendant often bears the burden of proving that the plaintiff failed to mitigate their damages. This typically involves demonstrating that the injured party did not take reasonable actions to limit their losses.
- Consequences of Failing to Mitigate:
- If the injured party does not mitigate damages, the court may reduce the amount of damages awarded to reflect the losses that could have been avoided. This means they may only be compensated for the losses that were reasonably unavoidable.
Examples of Mitigation
Employment: An employee who is wrongfully terminated may be required to seek new employment rather than continuing to claim lost wages indefinitely. The courts will expect them to make reasonable efforts to find comparable work.
Property Damage: A homeowner whose property is damaged by a fire must take reasonable steps to prevent further damage (e.g., securing the property against vandalism, undertaking temporary repairs) to ensure they do not incur additional costs unnecessarily.
- Financial Loss: A business that suffers a loss due to a breach of contract may need to seek alternative suppliers or customers to mitigate losses, rather than simply allowing the business to decline without any effort to remedy the situation.
Conclusion
Mitigating damages is a fundamental principle in both contract and tort law that encourages individuals and businesses to act responsibly after suffering losses. It not only promotes fairness but also aims to discourage individuals from allowing damages to escalate when they have the ability to reduce them. In legal disputes, demonstrating that the injured party failed to mitigate can significantly affect the outcome of damage claims.