Mitigation (law)

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Mitigation in law is the principle that a party who has suffered loss (from a tort or breach of contract) has to take reasonable action to minimize the amount of the loss suffered. As stated by the Canadian Federal Court of Appeal in Redpath Industries Ltd. v. Cisco (The), [1] "It is well established that a party who suffers damages as a result of a breach of contract has a duty to mitigate those damages, that is to say that the wrongdoer cannot be called upon to pay for avoidable losses which would result in an increase in the quantum of damages payable to the injured party." The onus on showing a failure to mitigate damages is on the defendant. In the UK, Lord Leggatt describes the "function of the doctrine of mitigation" as enabling the law

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to distinguish between effects on the claimant's financial position which are to be regarded as caused by the defendant's breach of contract and for which damages can therefore be recovered and effects which are attributed to the claimant's own action or inaction in response to the breach and for which the defendant is not liable. [2]

Iain Drummond notes that in English law there is no duty to mitigate loss. Rather, the principle is that "damages will be limited by an assumption that [a plaintiff] has taken reasonable steps in mitigation of loss", regardless of whether they have not in fact taken such steps. [3] Even where case law speaks of a "duty to mitigate", the duty has been cited as "not a demanding one". [4]

The issue of what is reasonable is especially contentious in personal injury cases where the plaintiff refuses medical advice. This can be seen in cases such as Janiak v. Ippolito . [5]

The antonym of mitigation is aggravation.

Examples

For example, consider a tenant who signs an agreement to rent a house for a year, but moves out (and stops paying rent) after only one month. The landlord may be able to sue the tenant for breach of contract: however, the landlord must mitigate damages by making a reasonable attempt to find a replacement tenant for the remainder of the year. The landlord may not simply let the house lie empty for eleven months and then sue the tenant for eleven months' rent. [6]

The actions of the defendant may also result in the mitigation of damages which would otherwise have been due to the successful plaintiff. For example, the Civil Law (Wrongs) Act 2002 (ACT) provides that mitigation of damages for the publication of defamatory matter may result from any apology made by a defendant and any correction published (s. 139I).

In Manton Hire & Sales Ltd v Ash Manor Cheese Co Ltd. (appeal judgment in 2013), the hirer of an unsuitably wide fork lift truck was justified in rejecting the supplier's proposed mitigation when the supplier had "only [made] an unclear offer to modify the product without specifying "the exact extent" to which the truck was to be modified. [7]

In the case of Thai Airways International Public Company Ltd v KI Holdings Co Ltd. (2015), a number of mitigating actions are listed which had been taken by Thai Airlines in response to a supplier's failure to deliver airplane seating which had been ordered for its planes. [2] In this case the airline had a number of alternative means of mitigating its loss. [8]

Related Research Articles

At common law, damages are a remedy in the form of a monetary award to be paid to a claimant as compensation for loss or injury. To warrant the award, the claimant must show that a breach of duty has caused foreseeable loss. To be recognised at law, the loss must involve damage to property, or mental or physical injury; pure economic loss is rarely recognised for the award of damages.

Negligence is a failure to exercise appropriate and/or ethical ruled care expected to be exercised amongst specified circumstances. The area of tort law known as negligence involves harm caused by failing to act as a form of carelessness possibly with extenuating circumstances. The core concept of negligence is that people should exercise reasonable care in their actions, by taking account of the potential harm that they might foreseeably cause to other people or property.

Punitive damages, or exemplary damages, are damages assessed in order to punish the defendant for outrageous conduct and/or to reform or deter the defendant and others from engaging in conduct similar to that which formed the basis of the lawsuit. Although the purpose of punitive damages is not to compensate the plaintiff, the plaintiff will receive all or some of the punitive damages in award.

A legal remedy, also referred to as judicial relief or a judicial remedy, is the means with which a court of law, usually in the exercise of civil law jurisdiction, enforces a right, imposes a penalty, or makes another court order to impose its will in order to compensate for the harm of a wrongful act inflicted upon an individual.

<span class="mw-page-title-main">Duty of care</span> Legal standard of care in activity

In tort law, a duty of care is a legal obligation that is imposed on an individual, requiring adherence to a standard of reasonable care to avoid careless acts that could foreseeably harm others, and lead to claim in negligence. It is the first element that must be established to proceed with an action in negligence. The claimant must be able to show a duty of care imposed by law that the defendant has breached. In turn, breaching a duty may subject an individual to liability. The duty of care may be imposed by operation of law between individuals who have no current direct relationship but eventually become related in some manner, as defined by common law.

<span class="mw-page-title-main">English tort law</span> Branch of English law concerning civil wrongs

English tort law concerns the compensation for harm to people's rights to health and safety, a clean environment, property, their economic interests, or their reputations. A "tort" is a wrong in civil law, rather than criminal law, that usually requires a payment of money to make up for damage that is caused. Alongside contracts and unjust enrichment, tort law is usually seen as forming one of the three main pillars of the law of obligations.

<span class="mw-page-title-main">Misrepresentation</span> Untrue statement in contract negotiations

In common law jurisdictions, a misrepresentation is a false or misleading statement of fact made during negotiations by one party to another, the statement then inducing that other party to enter into a contract. The misled party may normally rescind the contract, and sometimes may be awarded damages as well.

Tortious interference, also known as intentional interference with contractual relations, in the common law of torts, occurs when one person intentionally damages someone else's contractual or business relationships with a third party, causing economic harm. As an example, someone could use blackmail to induce a contractor into breaking a contract; they could threaten a supplier to prevent them from supplying goods or services to another party; or they could obstruct someone's ability to honor a contract with a client by deliberately refusing to deliver necessary goods.

Damages for breach of contract is a common law remedy, available as of right. It is designed to compensate the victim for their actual loss as a result of the wrongdoer’s breach rather than to punish the wrongdoer. If no loss has been occasioned by the plaintiff, only nominal damages will be awarded.

Consequential damages, otherwise known as special damages, are damages that can be proven to have occurred because of the failure of one party to meet a contractual obligation, a breach of contract. From a legal standpoint, an enforceable contract is present when it is: expressed by a valid offer and acceptance, has adequate consideration, mutual assent, capacity, and legality. Consequential damages go beyond the contract itself and into the actions that arise from the failure to fulfill. The type of claim giving rise to the damages, such as whether it is a breach of contract action or tort claim, can affect the rules or calculations associated with a given type of damages. For example, consequential damages are a potential type of expectation damages that arise in contract law.

Causation in English law concerns the legal tests of remoteness, causation and foreseeability in the tort of negligence. It is also relevant for English criminal law and English contract law.

Loss of chance in English law refers to a particular problem of causation, which arises in tort and contract. The law is invited to assess hypothetical outcomes, either affecting the claimant or a third party, where the defendant's breach of contract or of the duty of care for the purposes of negligence deprived the claimant of the opportunity to obtain a benefit and/or avoid a loss. For these purposes, the remedy of damages is normally intended to compensate for the claimant's loss of expectation. The general rule is that while a loss of chance is compensable when the chance was something promised on a contract it is not generally so in the law of tort, where most cases thus far have been concerned with medical negligence in the public health system.

<span class="mw-page-title-main">Expectation damages</span>

Expectation damages are damages recoverable from a breach of contract by the non-breaching party. An award of expectation damages protects the injured party's interest in realising the value of the expectancy that was created by the promise of the other party. Thus, the impact of the breach on the promisee is to be effectively "undone" with the award of expectation damages.

<span class="mw-page-title-main">Canadian contract law</span> Overview of contract law in Canada

Canadian contract law is composed of two parallel systems: a common law framework outside Québec and a civil law framework within Québec. Outside Québec, Canadian contract law is derived from English contract law, though it has developed distinctly since Canadian Confederation in 1867. While Québecois contract law was originally derived from that which existed in France at the time of Québec's annexation into the British Empire, it was overhauled and codified first in the Civil Code of Lower Canada and later in the current Civil Code of Quebec, which codifies most elements of contract law as part of its provisions on the broader law of obligations. Individual common law provinces have codified certain contractual rules in a Sale of Goods Act, resembling equivalent statutes elsewhere in the Commonwealth. As most aspects of contract law in Canada are the subject of provincial jurisdiction under the Canadian Constitution, contract law may differ even between the country's common law provinces and territories. Conversely; as the law regarding bills of exchange and promissory notes, trade and commerce, maritime law, and banking among other related areas is governed by federal law under Section 91 of the Constitution Act, 1867; aspects of contract law pertaining to these topics are harmonised between Québec and the common law provinces.

<i>Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd</i>

Parsons (Livestock) Ltd v Uttley Ingham & Co Ltd [1978] QB 791 is an English contract law case, concerning remoteness of damage. In it, the majority held that losses for breach of contract are recoverable if the type or kind of loss is a likely result of the breach of contract. Lord Denning MR, dissenting on the reasoning, held that a distinction should be drawn between losses for physical damage and economic losses.

<span class="mw-page-title-main">Landlord–tenant law</span> Law that details rights and duties of landlords and tenants

Landlord–tenant law is the field of law that deals with the rights and duties of landlords and tenants.

<i>British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Rlys Co of London Ltd</i>

British Westinghouse Electric and Manufacturing Co Ltd v Underground Electric Railways Co of London Ltd [1912] AC 673 is an English contract law case, concerning the duty to mitigate one's loss after a breach of contract.

<i>Highway Properties Ltd v Kelly, Douglas and Co Ltd</i> Supreme Court of Canada case

Highway Properties Ltd v Kelly, Douglas and Co Ltd is a leading Canadian property law case concerning commercial landlord-tenant relationships decided by the Supreme Court of Canada.

<i>Southcott Estates Inc v Toronto Catholic District School Board</i> Supreme Court of Canada case

Southcott Estates Inc v Toronto Catholic District School Board, 2012 SCC 51, [2012] 2 SCR 675, is a landmark case of the Supreme Court of Canada in the area of commercial law, with significant impact in the areas of:

The civil liability of a recreational diver may include a duty of care to another diver during a dive. Breach of this duty that is a proximate cause of injury or loss to the other diver may lead to civil litigation for damages in compensation for the injury or loss suffered.

References

  1. 1993 CanLII 3025 (F.C.A.)
  2. 1 2 England and Wales High Court (Commercial Court), Thai Airways International Public Company Ltd v KI Holdings Co Ltd. & Anor (2015), EWHC 1250 (Comm) (11 May 2015), accessed 12 May 2015
  3. Drummond, I, Is "duty to mitigate loss" a misnomer?, Shepherd and Wedderburn LLP, published 11 February 2016, accessed 16 January 2021
  4. Rix LJ, Lombard North Central Plc v Automobile World (UK) Ltd. (2010) EWCA Civ 20 (26 January 2010), paragraph 72, accessed 29 September 2022
  5. 1985 CanLII 62 (S.C.C.)
  6. "mitigation of damage" in Trischa Mann and Audrey Blunden (eds) Australian Law Dictionary (2010, Oxford University Press, ISBN   9780195557558)
  7. Guzhar, P., Claimant Acted Reasonably in Rejecting Supplier’s Proposal to Modify Faulty Product, Carson McDowell, published 27 August 2013, accessed 1 June 2021
  8. Davies, G., Mitigating loss: Get the balance right, published 9 June 2015, accessed 12 May 2021

See also