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3.1b Mitigation

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In addition to remoteness, another factor that will limit the ability to recover damages is the general requirement, at law, to mitigate one’s damages. That means that an injured party must take any reasonable step available to it to reduce the extent of the damage caused by the other party’s breach. The injured party cannot simply sit back and allow the losses to pile up or continue, while expecting the breaching party to pick up the tab. He or she must take reasonable steps to minimize those losses.

In our example, suppose the buyer had discovered that the brakes on the forklift were faulty before using it. Could the buyer have simply decided to drive the forklift anyway (or allow someone else to do it), blithely expecting that if she suffered any losses as a result she could simply recover them from you because of your breach? The answer is no. The law will only compensate an injured party for a loss that is due to the breach and not for the injured party’s failure to behave reasonably after the breach has occurred.

Reasonably speaking, the buyer would have to inform you of the defective brakes so that you could fix them, provide the buyer with a replacement forklift, or take whatever other step might be reasonably available to remedy the situation. To the extent that you refuse to do so, the buyer could then sue you to be compensated for the cost of repair or replacement. Note how, through the obligation to mitigate, the law ensures that both parties have taken steps to minimize losses and suffering.

Canadian Business Contracts Handbook

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