Mitigation of damages is a contract law concept demanding a victim in a contract conflict to minimize the damages resulting from a breach of the contract. The victim is legally bound to behave to mitigate both the consequences of the breach and their losses. This is true even if the victim who suffers personal injury through no fault of their own must take reasonable steps to avoid further loss and minimize the loss consequences of the injury.
If a victim does not mitigate damages, the court may refuse to award any excessive damages that the victim could have reasonably dodged. The court will consider the victim’s actions following the breach of contract to determine if they took measures that a reasonable individual in similar circumstances would have taken to minimize their losses. Nonetheless, mitigation of damages does not demand the victim take drastic measures or make significant sacrifices to sidestep or minimize loss.
What Does Duty to Mitigate Mean?
When a person suffers damages due to a breach of contract, they have the legal duty to minimize the consequences and losses resulting from the injury—the duty to mitigate attempts to deny the recovery of any damages that could have been reasonably avoided.
“Reasonably avoided” has no clear meaning but typically represents what a reasonable person would do under comparable circumstances. If a person has a duty to mitigate damages and does not do it, the courts will usually decrease their damages by the amount they could have mitigated.
How Do Courts Determine Damages in a Breach of Contract Lawsuit?
To determine damages in a breach of contract lawsuit, the court will first examine the contract itself. The court will specify what was pledged and by whom. The court will assess the terms of the contract. The court will also determine if a breach occurred and when. If no breach transpired, the plaintiff is not entitled to damages.
The court will then evaluate damages by determining whether the contract was partly fulfilled. The court will also inspect the plaintiff’s actions to decide if the plaintiff was partially liable for the damages. If so, the damage award may be decreased.
What are Common Examples of Mitigation of Damages?
To further demonstrate mitigation of damages, here are some illustrations in different areas of law:
- Contract Law: A homeowner contracts with a plumbing business to fix a toilet leak for a set price. The plumbing business starts to repair the leak but then discovers a less complicated and more advantageous job. The plumbing business leaves the assignment, consequently breaching the contract. The homeowner never employs another plumber and instead lets the leak worsen. The house ultimately develops a severe mold infestation and distorted flooring. The plumbing business will not be responsible for the mold infestation and warped flooring because the homeowner had a duty to mitigate damages by employing a new business.
- Landlord/Tenant: A tenant must relocate for a new job and breaks his lease early. He still has six months left on his lease. The landlord allows the apartment to sit empty for eight months, then sues the tenant in landlord-tenant court for eight months of rent plus late fees and other penalty costs. The landlord will not get this full payment because the landlord had a duty to mitigate by locating a substitute tenant.
- Employment: An employee signs an employment contract to work as a consultant in a non-at-will state. Due to the recession, the employer wrongfully terminates the contract after only one year. The worker does not bother to find a new position and instead sues for lost earnings. The employee will not get the amount he asks for because he had a duty to scour for a new position to mitigate his damages.
- Business Law: A creditor must mitigate damages when a debtor breaches. For instance, if a debtor breaches his auto loan, the creditor must mitigate by trying to sell the automobile. He cannot keep the vehicle and sue the debtor for damages.
How Can Failure to Mitigate Damages Be Proven?
Failure to mitigate damages is a common defense. Though it won’t presumably stop the defendant from paying damages entirely, it could decrease their liability. However, the defendant must prove that the plaintiff could reasonably have done something further.
One of the most everyday cases involving mitigating damages surrounds medical treatment in personal injury claims. When a plaintiff rejects treatment after their injuries or fails to get medical attention entirely, it could be a “failure to mitigate” problem.
For instance, a plaintiff sues an individual who flew through a red light and slammed into their car. The victim sustained severe wounds in the crash that required therapy. Say the victim declined some cure, like surgery, that could have reduced the stringency of their damages. In that case, the defendant may not have to pay for the cost of any aggravated damages that the plaintiff could have evaded through treatment.
The defendant would need to demonstrate that the surgery would have lowered the plaintiff’s pain and suffering or supplied them with more function. It’s not a way to exonerate the defendant from guilt but more to minimize the amount they pay in damages.
Refusing to Seek Employment
Many plaintiffs seek payment for lost earnings connected to an accident. Yet, if the defendant demonstrated that they had chances to find employment and work but failed to follow through, it could decrease their award. Legally, there’s a noteworthy line between being unfit to work and declining to work.
Mitigating damages can be difficult, particularly when proving either side of the case. It helps to have a skilled lawyer on your side to clarify the finer points and help you navigate the intricacies to reach the best likely result.
The defendant has the responsibility to demonstrate that the plaintiff failed to mitigate damages. A defendant must show that the plaintiff could have bypassed extra expenses and damages such as failing to receive medical care or having surgery to evade future damages. The defendant must prove by a “preponderance of the evidence” that the plaintiff failed to decrease the costs or losses they could have reasonably avoided.
What if the Plaintiff Doesn’t Take Reasonable Steps to Mitigate Damages?
When a plaintiff has been injured by the defendant’s negligence, the plaintiff must take reasonable steps to mitigate damages. When the plaintiff fails to mitigate their damages and the defendant proves that the plaintiff did not take reasonable steps to reduce their losses after the injury, the court will reduce the plaintiff’s damages by the amount that the plaintiff could have avoided or mitigated.
Do I Need a Lawyer for a Failing to Mitigate Damages?
The duty to mitigate will almost invariably come up in specifying your right to recover damages. A local contract attorney can help clarify the law and your rights to prove that the plaintiff failed to reduce or mitigate their damages. Also, an attorney can advise on what to do to preserve your lawsuit. Use LegalMatch to find a business attorney near you. There is no fee to schedule a confidential consultation with one of the business lawyers in your area. Use LegalMatch today.