Legal Definitions - Mitigation of Damages

Mitigation of Damages is a fundamental legal principle that requires a party who has suffered harm or loss due to another's wrongful act or breach of contract to take reasonable steps to minimize the financial impact of that harm. In essence, the law prevents an injured party from recovering damages that could have been avoided through sensible and prudent efforts. This doctrine encourages individuals and entities to act responsibly to prevent their losses from escalating unnecessarily, even when someone else is at fault.

Here are a few examples illustrating how the principle of Mitigation of Damages applies in different situations:

• Breach of Employment Contract: Imagine an employee, Sarah, is wrongfully terminated from her job without cause, violating her employment contract. While she has a right to sue her former employer for lost wages, the doctrine of mitigation requires Sarah to actively search for comparable new employment. If she unreasonably refuses suitable job offers or makes no effort to find a new position, she might not be able to recover the full amount of lost wages from her former employer for the period she could have been employed elsewhere. The court would expect her to take reasonable steps to reduce her financial loss.

• Negligence in a Car Accident: Suppose David is involved in a car accident caused by another driver's negligence, resulting in a back injury. David has a duty to seek appropriate medical treatment, follow his doctor's recommendations, and attend physical therapy sessions. If David neglects his medical care, leading to a worsening of his injury or a longer recovery period than necessary, he might not be able to claim damages for the additional pain, suffering, or lost income that could have been avoided by adhering to medical advice. He must take reasonable steps to recover and prevent his injuries from becoming more severe.

• Breach of Service Agreement: Consider a small business, "Tech Solutions," that contracts with a web design firm to build a new e-commerce website. Halfway through the project, the web design firm unexpectedly breaches the contract and abandons the work. Tech Solutions cannot simply wait indefinitely and then sue for all potential lost profits from the delayed website launch. Instead, it has a duty to mitigate damages by promptly seeking another qualified web design firm to complete the project. The damages Tech Solutions could recover would be limited to the additional costs incurred in hiring a new firm and any unavoidable losses during the reasonable time it took to secure a replacement.