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] That doctrine of mitigation has been clearly stated in Red Deer College v. Michaels, [1976] 2 S.C.R. 324, where Laskin C.J. said, at p. 331:
Requirements to Mitigate ...a plaintiff bears no obligation to mitigate, however, damages can be reduced if the plaintiff failed to take reasonable steps to mitigate his losses...The general rule is that a plaintiff bears no obligation to mitigate, however, damages can be reduced if the plaintiff failed to take reasonable steps to mitigate his losses.4 For instance, the duty for mitigation may not apply when the injured party does not have the financial resources to reduce the damages. A party that unreasonably fails to mitigate their losses reduces the quantum of damages to the extent that mitigation would have avoided the loss.5 For instance, if the plaintiff's actions partially avoided the loss, then a partial reduction of the damages is justifiable. If the plaintiff takes reasonable steps to mitigate his losses, he may recover the costs and expenses incurred in mitigation of damages. The valuation of damages is, therefore, a "balancing process" as the Federal Court of Appeal stated in Redpath Industries Ltd. v. Cisco (The): "The Court must make sure that the victim is compensated for his loss, but it must at the same time make sure that the wrongdoer is not abused."6 The requirement to take steps to mitigate losses is one such responsibility and it is argued by a party seeking justice in the particular circumstances of the case. Mitigation in Property Damage Claims The plaintiff's duty to mitigate can apply to events leading up to the loss and post-loss depending on the circumstances of each case. In any event, the general principle is that the duty to mitigate applies to claims for breach of contract and tort. A plaintiff's duty to mitigate damages in tort or breach of contract cases was further explained by Justice Wilson in Janiak v. Ippolito, [1985] SCJ No. 5 (QC) at para 33:
...the obligation of a plaintiff is to act prudently and take the reasonable steps to not create additional damages.In summary, the obligation of a plaintiff is to act prudently and take the reasonable steps to not create additional damages. However, the plaintiff is not required to take extraordinary steps or all possible steps to mitigate the loss. I. Pre-Loss Events In contract and tort actions, failing to mitigate signifies that a party has not taken the necessary actions to prevent additional damage to its property. For example, what often starts as an undetected leak can quickly spread throughout the property and make detection extremely difficult. To mitigate losses, the homeowner should be taking steps for early detection. Mitigating in property damage actions can be a simple as removing fallen trees or branches from your property, covering damage parts of your property with tarps to prevent further damages, turning off your electricity to prevent a fire, turning off your water to stop a leak, drying out your home, etc. Depending on the extent of damage, you may need to retain a plumber, engineer, electrician, restoration company, contractor or other professionals in order to mitigate those losses. In addition, basic maintenance can also prevent a loss and reduce damages. For example, if you have an old tree in your backyard, one you know that has a disease or is dead, and it falls on your neighbour's house, you could be liable for the damages caused because you did not mitigate, or prevent damage, by removing the tree before it fell. In the case of defective workmanship, consideration should be given to any parties who had an obligation to inspect such workmanship. This can include architects or engineers, construction managers, municipal inspectors, administrative authorities, etc. Although these parties often had no part in directly causing the loss, they may have been in a position to discover the defective workmanship which ultimately caused the failure, and can be held liable for this. II. Post-Loss After a loss has occurred, a number of parties are responsible for mitigating the loss, such as emergency and security personnel, and those responsible for automatic mitigation systems such as sprinklers. In the event that the immediate response to the loss is not as effective as expected, there may be available avenues to pursue these parties for failure to properly respond to the loss. While actions as against emergency services such as fire departments can be difficult to succeed in, actions as against security companies, and parties responsible for the design and construction of fire suppression systems can be very lucrative. Unfortunately, this class of subrogation target will often not be held liable for the full extent of the loss, as they ultimately did not cause it. However, when more direct targets are not available, or have insufficient insurance coverage, pursuing these targets can greatly increase the recovery potential. ...everyone has a common law duty to mitigate their damages following a property loss.The Claims Adjuster's Duty to Mitigate It is fair to say that everyone has a common law duty to mitigate their damages following a property loss. The duty to mitigate is also extended to claims adjusters following a loss. The initial investigation following a loss is crucial. Mitigation requires for an adjuster to take the necessary steps to secure emergency and restoration services immediately after a loss and these services must be performed at an effective cost rate. When a fire loss or water loss occurs, immediate and appropriate action will help reduce further damages to the property and facilitate an efficient return to normalcy. A defendant can reduce damages of the action by arguing that the plaintiff and the claims adjuster did not act promptly and reasonably in attempt to mitigate damages following the loss. The duty to mitigate following a loss can extend to the duty to effectively analyze the cause of the loss, providing prompt and accurate repairs services to a property and effectively monitoring and adjusting the claim. Conclusion We must keep in mind that if a claim appears excessive, a defendant will likely blame the insurer for running up unnecessary costs and the Court may reduce the quantum of damages if they could have been reduced or prevented. There is no formula that can be used to assess the duty to mitigate in every matter. In any event, it is important to consider mitigation and how it might be applied to the circumstances of each case in order to assess how damages might be awarded. 1 Asamera Oil Corp. v. Sea Oil & General Corp., [1979] 1 S.C.R. 633, at p. 660. Which party has an obligation to mitigate damage if a contract has been breached?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.
What is the plaintiff's duty to mitigate?The duty to mitigate losses is the obligation upon a person who sues another for damages to reduce their damages. The duty is not to prevent the other person from causing you losses (that would be hard if not impossible in many cases). All that is required is that you take reasonable steps to reduce your losses.
What is the duty to mitigate damages in contract law?The duty of someone who was wronged to make reasonable efforts to limit the resulting harm. A duty to mitigate can apply to the victim of a tort or a breach of contract. Neglecting a duty to mitigate precludes the recovery of damages that could have been avoided through reasonable efforts.
What does it mean when it is said that a plaintiff has a duty to mitigate his losses?Mitigation is a common law doctrine based on fairness and common sense. As a general rule, a plaintiff will not be able to recover losses that could have been reasonably avoided.
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The plaintiff has an obligation to try to mitigate one’s damages in a breach-of-contract case.
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