| Mitigation of damage arises in a number of | | | | incur expense in doing so) rather than allowing |
| contexts. Claimants to legal proceedings have a | | | | their damage to exacerbate by not acting; |
| positive duty to avoid suffering loss when a legal | | | | 3. Allowing time to pass to acquire alternate |
| wrong has been suffered be them. Mitigation is a | | | | goods or services in order to deliver on a |
| powerful set of legal principles that entitle a | | | | contract, a claim that the claimant has failed to |
| defendant to argue that they are obliged to pay | | | | mitigate is more likely to be successful; |
| lesser sums in a claim for damages. | | | | 4. Where there are avenues available to |
| What should or should not have been mitigated | | | | safeguard an interest, such as registering a |
| by reasonable action in a particular case is a | | | | registered interest in property on a relevant public |
| question relying on the facts of the case. | | | | register and the claimant has not done so, is it |
| Whether the law imposes upon the claimant the | | | | likely that a claimant has failed to mitigate; |
| obligation to mitigate on those facts in the first | | | | 5. Where sale of property may be made to |
| place, that is, has the duty arisen, is a question of | | | | minimize loss in a buoyant market and is not |
| law. | | | | made, there may have been a failure to mitigate; |
| Background | | | | 6. Where a claimant exercises a right to terminate |
| The measure of compensation that a claimant is | | | | a contract on the basis of late delivery may be |
| entitled to recover is the loss naturally flowing | | | | relevant to mitigation in a rising market and they |
| from the legal wrong. This measure of damage is | | | | refuse to accept an offer less than what a |
| offset by a duty to mitigate – or minimize | | | | purchaser in the rising market may be prepared |
| – losses suffered by them by taking all | | | | to pay; |
| reasonable steps to mitigate the loss consequent | | | | 7. In some cases, it may be unreasonable for an |
| on the breach. | | | | injured party to consider an offer from the party |
| Thus, simply because a defendant breaches a | | | | in breach in mitigation; in commercial contracts |
| contract or infringed copyright does not mean | | | | (rather than those of personal service) this will |
| that a claimant is entitled to recover endless | | | | ordinary not be the case. |
| damages or compensation for their conduct. | | | | On the other hand, the claimant may not be |
| Unsuccessful litigants are not required to | | | | required to mitigate: |
| compensate a successful claimant where the | | | | 1. When the claimant does not need to undertake |
| claimant has sat back and allowed damages to | | | | undue risk in expending resources to mitigate loss; |
| accumulate or to pay sums that are too remote | | | | 2. Commencing action against another defendant, |
| in law to recover. | | | | where a cause of action lies against other parties |
| For instances, a supplier of goods or services fails | | | | who are liable to them, where a case with |
| to deliver, the buyer is not entitled to sit back on | | | | reasonable prospects of success cannot be |
| a rising market or wait until a contract for onward | | | | shown; |
| supply has fallen though, and then claim the loss | | | | 3. in circumstances that would require the inured |
| from the defendant. They must approach the | | | | party to surrender, dispose of or destroy their |
| market with reasonable speed and buy equivalent | | | | own property rights to mitigate the loss of |
| goods or services. | | | | defendant; |
| Reasonable Steps to Avoid Loss | | | | 4. a claimant will not be required to act against the |
| A claimant must take reasonable steps to | | | | interests of innocent parties to reduce |
| mitigate loss. Claimants are not entitled to recover | | | | recoverable loss; |
| those damages represented by sums that are | | | | 5. the claimant is not required to sacrifice their |
| avoidable by taking reasonable steps. If the | | | | commercial reputation in order to avoid losses |
| claimant has failed to take reasonable steps to | | | | suffered by a breach of contract; |
| avoid particular losses, the claimant is not entitled | | | | 6. to allocate resources, including personnel and |
| in law to recover them, as they are not entitled | | | | finances that they do not have to take steps to |
| to profit from their own neglect. This neglect may | | | | mitigate their loss. Note that this would need to |
| take of the form of either failing to take action | | | | be proved with sworn evidence. |
| reasonable steps or allowing an act to continue | | | | Recovering Sums spent in Mitigation |
| that would have increases loss. | | | | When a claimant does take steps to mitigate their |
| A claimant is not entitled to recover sums or for | | | | loss, the loss that they suffer as a result of |
| actions taken that were unreasonably spent or | | | | taking those steps is in broad principle recoverable |
| steps that were unreasonably taken. The claimant | | | | from the defendant. This remains the case if the |
| will only be entitled to recover those expenses | | | | steps taken incur greater expense or loss than |
| that were reasonably incurred. | | | | would have been incurred if these actions had not |
| Where a claimant takes measures to mitigate | | | | been taken. |
| loss, the defendant is entitled to the benefit of | | | | Instances of where this has been the case are: |
| those steps, such that the defendant is required | | | | 1. Where substitute goods or services are |
| to pay the reduced measures of damages | | | | required to replace damaged, destroyed or |
| resulting from the steps made in mitigation. In this | | | | undelivered goods; |
| way, the claimant must hand over the benefit of | | | | 2. Expenditure on advertisements where trade |
| the steps made in mitigation to the defendant. | | | | mark infringement has taken place; |
| This applies even if the claimant would have been | | | | 3. Incurring expenses to conduct enquiries where |
| entitled to recover the losses if the particular | | | | unlawful conduct has taken place, in the |
| steps made in mitigation had not been made. | | | | appropriate circumstances, even though the |
| What is Reasonable? | | | | enquiries may have exacerbated damage, |
| Although the claimant is not required to nurse the | | | | provided that there was no ulterior motive. |
| interests of the defendant as if they were his | | | | Although such actions may increase or aggravate |
| own. A claimant does not need to act with | | | | damage suffered, the increased damage is |
| perfect knowledge or an ideal wisdom, however | | | | recoverable as well as the incurred expense, |
| the law will protect against wanton, needless or | | | | provided that the steps are taken to safeguard |
| careless conduct. | | | | the claimants interests. |
| The same test applies to the duty to mitigate | | | | There is a caveat to recover of sums spent in |
| regardless of whether it is an infringement of | | | | mitigation over and above what the law considers |
| intellectual property rights, a contract claim, or the | | | | reasonable. If the claimant goes further than what |
| more serious claims such as fraudulent | | | | the law requires, the defendant will be entitled to |
| misrepresentation. The parties must act | | | | the reduction of damage. The claimant must be |
| reasonably between themselves having regard for | | | | aware of the limits of what may be reasonably |
| the turn of events between them. The claimant is | | | | done in the circumstances to reduce their loss, |
| not required to take unusual steps outside the | | | | and then realise they are not required to go |
| outside the ordinary course of business; indeed if | | | | further. That limit is where the expense in |
| they do so, they will not be entitled to recover | | | | mitigation is not one arising out of the |
| the sums expended. | | | | consequences of the breach, and not in the |
| The following guidance may be useful to | | | | ordinary course of business. |
| determining when the claimant has a duty to | | | | Conclusion |
| mitigate their loss: | | | | Although many claimants may have strong claims |
| 1. The time that the claimant came into the | | | | on liability for infringement of copyright, patents |
| knowledge that a breach had taken place may be | | | | and other intellectual property rights, mitigation is |
| relevant to determining when it would be | | | | a sword in the hands of the defendant to reduce |
| reasonable for them to take action to mitigate | | | | loss suffered: if the claimant does not discharge it |
| loss; | | | | duty to mitigate, they are not entitled to recover |
| 2. where damage may be caused in the natural | | | | that loss, thus reducing the sum to be paid by the |
| course of events to the claimant’s property, | | | | defendant. |
| they may be required make their own repairs (or | | | | |