Mitigation of loss and contributory fault

Overview

The requirement to take reasonable steps to limit a loss, who has to prove a failure to do it, what happens when mitigating turns a profit, and when the 1945 Act reduces damages in a contract claim.

What you need to know

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Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is the duty to mitigate?

   Model answer

   The claimant must take reasonable steps to reduce the loss caused by the breach. Loss that reasonable steps would have avoided is not recoverable.

2. 2

   Is the duty to mitigate really a duty?

   Model answer

   The claimant commits no wrong by failing to mitigate. The consequence is simply that the avoidable part of the loss cannot be recovered.

3. 3

   Which case states the principle of mitigation?

   Model answer

   British Westinghouse v Underground Electric Railways [1912] states the principle of mitigation. Benefits actually obtained from mitigating steps are set against the loss.

4. 4

   Must a claimant accept an offer from the party in breach?

   Model answer

   Payzu Ltd v Saunders [1919] held that a buyer should have accepted the seller's offer of cash terms. Refusing a reasonable offer from the party in breach can be a failure to mitigate.

5. 5

   How far must a claimant go to mitigate?

   Model answer

   Only reasonable steps are required, judged in the difficult position the breach created. Pilkington v Wood [1953] held that a claimant need not begin uncertain litigation against a third party.

6. 6

   Who bears the burden of proving a failure to mitigate?

   Model answer

   The defendant must prove that the claimant failed to take reasonable steps. The claimant is not required to justify every decision taken after the breach.

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