Remedies - Avoidable consequences and mitigation of damages

Learning Outcomes

After reading this article, you will understand the principle of avoidable consequences and the duty to mitigate damages in contract and tort law. You will be able to identify when a claimant must take reasonable steps to reduce loss, recognize the limits of recovery for avoidable losses, and apply these rules to MBE-style scenarios.

MBE Syllabus

For MBE, you are required to understand the rules limiting a claimant's recovery when losses could have been reasonably avoided. This includes:

• The duty of a claimant to mitigate damages after breach or injury.
• The consequences of failing to take reasonable steps to reduce loss.
• The foreseeability of mitigation measures and their reasonableness.
• The application of these principles in both contract and tort contexts.
• The effect of mitigation on the calculation of damages.

Test Your Knowledge

Attempt these questions before reading this article. If you find some difficult or cannot remember the answers, remember to look more closely at that area during your revision.

1. If a claimant fails to take reasonable steps to reduce their loss after a breach of contract, what is the likely effect on their damages award?
   1. They recover all losses, including avoidable ones.
   2. They are barred from any recovery.
   3. Their damages are reduced by the amount they could have avoided.
   4. They must pay damages to the breaching party.
2. Which of the following best describes the "duty to mitigate" in contract law?
   1. The claimant must accept any substitute performance.
   2. The claimant must take reasonable steps to minimize loss.
   3. The claimant must forgive the breach.
   4. The claimant must renegotiate the contract.
3. In a personal injury claim, if the injured party unreasonably refuses recommended medical treatment that would have reduced their harm, what is the likely result?
   1. Full damages are awarded.
   2. Damages are reduced to reflect avoidable harm.
   3. No damages are awarded.
   4. The defendant is excused from liability.

Introduction

The law does not allow a claimant to recover damages for losses that could have been reasonably avoided after a breach or injury. This is known as the rule of avoidable consequences or the duty to mitigate damages. The principle applies in both contract and tort, requiring claimants to act reasonably to limit their losses. If a claimant fails to do so, their damages may be reduced accordingly.

Key Term: Avoidable Consequences
The rule that a claimant cannot recover damages for loss that could have been reasonably avoided after breach or injury.

Key Term: Duty to Mitigate
The obligation on a claimant to take reasonable steps to reduce or prevent further loss following a breach or tort.

The Duty to Mitigate

Once a breach of contract or a tortious injury occurs, the claimant must take reasonable steps to minimize their loss. This does not mean the claimant must take every possible action, only those that a reasonable person would take in the circumstances.

If the claimant unreasonably fails to mitigate, damages will be reduced by the amount that could have been avoided. The burden is on the defendant to prove that mitigation was possible and reasonable.

Reasonableness and Foreseeability

The claimant is not required to take extraordinary or risky measures. Only reasonable actions are expected. The cost and practicality of mitigation are considered. If mitigation would involve undue risk, expense, or hardship, the claimant is not penalized for not taking those steps.

Mitigation must also be foreseeable. The claimant is not required to anticipate unusual or remote possibilities.

Application in Contract Law

In contract cases, the duty to mitigate means the non-breaching party must seek alternative performance or substitute goods or services if available. For example, if a supplier fails to deliver goods, the buyer should attempt to purchase replacements at a reasonable price.

If the claimant does mitigate, they may recover the cost of reasonable mitigation efforts, even if those efforts are unsuccessful.

Application in Tort Law

In tort, especially personal injury, the claimant must seek appropriate medical treatment and avoid actions that would worsen their condition. If a claimant refuses reasonable medical advice, damages may be reduced to reflect the harm that could have been avoided.

Limits on Recovery

A claimant cannot recover for losses that could have been avoided by reasonable mitigation. However, they are not required to accept humiliating, dangerous, or unreasonable alternatives.

If the claimant incurs additional reasonable expenses in mitigation, these are recoverable as part of damages.

Worked Example 1.1

A landlord breaches a lease by evicting a tenant before the end of the term. The tenant could have rented a similar apartment nearby for the same rent but chooses not to do so and remains unemployed for several months.

Question: How will the tenant's damages be calculated?

Answer: The tenant's damages will be reduced by the amount of rent they could have avoided losing by renting the similar apartment. The duty to mitigate requires the tenant to take reasonable steps to find substitute accommodation.

Worked Example 1.2

A buyer contracts to purchase widgets from a seller. The seller breaches by failing to deliver. The buyer could have bought substitute widgets from another supplier at a slightly higher price but chooses not to do so and claims the full contract price as damages.

Question: What damages can the buyer recover?

Answer: The buyer can recover the difference between the contract price and the cost of the substitute widgets, plus any reasonable expenses of mitigation. The buyer cannot recover for losses that could have been avoided by purchasing substitutes.

Worked Example 1.3

A plaintiff suffers a broken arm in a car accident caused by the defendant. The plaintiff refuses a simple, low-risk surgery recommended by doctors, which would have restored full function, and instead does nothing, resulting in permanent disability.

Question: What damages will the plaintiff receive?

Answer: Damages will be reduced to reflect only the harm that could not have been avoided by reasonable medical treatment. The plaintiff cannot recover for permanent disability that would have been avoided by accepting reasonable care.

Exam Warning

The duty to mitigate does not require the claimant to accept humiliating, dangerous, or unreasonable alternatives. Only reasonable steps are expected. If mitigation would involve significant risk or hardship, the claimant is not penalized for refusing.

Revision Tip

Always consider whether the claimant could have reasonably reduced their loss after breach or injury. If so, damages may be limited to the loss that could not have been avoided.

Key Point Checklist

This article has covered the following key knowledge points:

• The avoidable consequences rule limits recovery to losses that could not have been reasonably avoided.
• The duty to mitigate applies in both contract and tort law.
• Claimants must take reasonable steps to reduce loss after breach or injury.
• Damages are reduced by the amount of loss that could have been avoided.
• The defendant bears the burden of proving failure to mitigate.
• Claimants are not required to take extraordinary, risky, or humiliating steps.
• Reasonable mitigation expenses are recoverable as damages.

Key Terms and Concepts

• Avoidable Consequences
• Duty to Mitigate