What Do You Have to Do to Mitigate Your Damages?

When someone breaches a contract with you, the general assumption is that you can sit back, do nothing, sue, and recover your damages. But that’s not always how it works. Often, even though you are the “victim” of a breach of contract–you still may have some obligations to fulfill if you want to be able to recover losses or compensation from the breach.

Mitigation of Damages

It’s called mitigation of your damages. Mitigation means that you have taken measures to lessen the financial loss caused to you, by the breach of the contract and that you have done whatever you can, to stop any ongoing, continuing financial loss.

The typical example is when a tenant breaches a lease agreement. While the landlord can sue the tenant for damages, the landlord normally still  has to actively pursue new tenants, to lessen the financial losses caused by the old tenant having broken the lease.

Imagine a company that is supposed to have an IT company work on its computers, and being in business depends on the computers being worked on or repaired. But the IT company does nothing, in breach of contract.

The company with broken computers cannot just sit back, do nothing, remain out of business, and amass huge financial loss; they would have to act quickly to find another company to do the same work, so as to get their business up and running as quickly as possible.

Someone who has had a contract breached, doesn’t have to spend a ton of money, or go to great lengths to lessen or mitigate damages–they just have to do what is reasonable, and be diligent in trying to lessen the financial loss. But if money is spent trying to mitigate damages, that money can be recovered as damages, in the breach of contract case.

Use as a Defense

A Defendant sues for breach of contract can (and they often do), use failure to mitigate damages, as a defense to the breach of contract action. And if a judge or jury were to find that you did not mitigate your damages the court could lessen the amount of damages you can recover based on your failure to mitigate damages.

Waiving Mitigation Requirements

Many contracts have specific language that waives the obligation to mitigate damages. That language can do away with the mitigation defense. Whether or not it’s right for your situation, in your particular agreement, is something to discuss with your business law attorney.

Waiving mitigation can help you if you’re the party suing for breach of contract; it eliminates an available defense for the other side being sued. But of course, if you’re the one sued, you now can no longer rely on failure to mitigate as a defense, if you have waived that obligation in your business contracts.

Call our Fort Lauderdale business attorneys at Sweeney Law P.A. at 954-440-3993 for help with your breach of contract case.

Sources:

media.floridabar.org/uploads/2020/12/504-9.rtf

scholarship.law.columbia.edu/faculty_scholarship/399/