Legal Definitions - mitigation-of-damages doctrine

The mitigation-of-damages doctrine is a fundamental legal principle that requires an individual or entity who has suffered harm or a breach of contract to take reasonable steps to minimize the financial losses or negative effects resulting from that harm or breach. Essentially, it means that an injured party cannot simply allow their damages to accumulate without making an effort to prevent further loss. If a court finds that the injured party failed to make such reasonable efforts, the amount of compensation they can recover from the party who caused the harm may be reduced. This principle is sometimes also referred to as the avoidable-consequences doctrine.

Here are some examples illustrating this doctrine:

• Employment Contract Breach: Imagine a software engineer who is wrongfully terminated from their job with six months remaining on their employment contract. The engineer cannot simply remain unemployed for the entire six months and expect their former employer to pay their full salary for that period. The mitigation-of-damages doctrine requires the engineer to make reasonable efforts to find a comparable new job in their field. If the engineer finds a new job after two months, their damages from the former employer would be reduced by the income earned from the new job. If they deliberately chose not to look for work, a court might reduce their potential recovery by the amount they *could have* earned had they diligently searched for a new position.

• Property Damage from Negligence: Consider a homeowner whose roof is damaged by a contractor's negligence during a repair project, leading to a leak that starts to ruin the ceiling and furniture inside the house. Once the homeowner discovers the leak, they are expected to take prompt, reasonable steps to prevent further damage, such as placing buckets to catch water, covering furniture, and immediately contacting a different repair service or the original contractor to fix the leak. If the homeowner ignores the leak for several weeks, allowing extensive mold to develop and structural damage to occur, a court might limit the contractor's liability to only the initial damage that would have occurred had the homeowner acted promptly. The homeowner would not be compensated for the additional, avoidable damage.

• Commercial Lease Violation: A small business owner decides to close their shop and breaks their commercial lease three months early, vacating the premises without notice. The landlord cannot simply leave the storefront empty for three months and demand full rent from the former tenant. The mitigation-of-damages doctrine obligates the landlord to make reasonable efforts to find a new tenant for the property, such as advertising the vacancy, showing the space to prospective renters, and offering it at a fair market rate. If the landlord successfully re-rents the property after one month, the original tenant would only be liable for the one month of lost rent, plus any reasonable costs incurred by the landlord in finding the new tenant. If the landlord made no effort to find a new tenant, a court might significantly reduce or even eliminate the original tenant's liability for the remaining three months of rent.