mitigation of damages

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The mitigation of damages doctrine, also known as the doctrine of avoidable consequences, prevents an injured party from recovering damages that could have been avoided through reasonable efforts.

The duty to mitigate damages is most traditionally employed in the areas of tort and contract law. In a breach of contract case, upon receiving notice that one party to a contract does not intend to perform, the other party is required to mitigate damages, meaning that it must take reasonable efforts to avoid further losses from the breach. The duty to mitigate damages was famously illustrated in contract law in Luten Bridge Co. vs. Rockingham County where Rockingham County hired Luten Bridge Co. to construct a bridge. Thereafter, the County voted not to continue with the construction of the bridge and informed Luten to cease construction of the bridge. However, Luten continued construction, then filed suit seeking damages for the counties breach of contract. The court held that Luten had a duty to stop construction and that a contractor cannot continue to work on a project and increase the damages stemming from the breach of contract.

Mitigation of damages has also been invoked in the field of property law. For example, if a tenant abandons their lease, a landlord has duty to mitigate damages caused by the breaching tenant. In this case, the mitigation of damages doctrine imposes a duty on the landlord to try to find a new tenant and re-rent their property.

[Last updated in June of 2020 by the Wex Definitions Team]