Breach of Contract: Mitigation Mistakes Claimants Make

In breach of contract claims, establishing liability is only the first step. Even where a breach is clear, damages may be reduced sometimes substantially if the court concludes that the claimant failed to take reasonable steps to mitigate their loss. Strong claims are frequently weakened by avoidable errors at this stage.

Under English law, a claimant is required to act reasonably to limit losses following a breach. The obligation is not to achieve the best possible outcome, nor to take undue risks or incur excessive cost, but to respond sensibly in the circumstances. What is reasonable is assessed by the court with the benefit of hindsight, which makes early decisions critical.

A common error is inaction. Claimants sometimes assume that because the breach was not of their making, they are entitled to allow losses to accumulate and recover them in full. That assumption is misplaced. Where there are obvious and reasonable steps available to reduce loss, failing to take them will usually result in a reduction in damages.

Another frequent misstep is the rejection of reasonable alternatives offered after the breach. Where substitute goods, services, or commercial opportunities are available, a claimant is generally expected to give them proper consideration. Refusal based on frustration, principle, or tactical positioning is unlikely to be well received. Courts routinely penalise claimants who decline reasonable replacement arrangements.

Delay is a further hazard. Waiting too long to secure a replacement contract, alternative supplier, or new tenant can undermine a claim. Even in an unfavourable market, a claimant is expected to act promptly and keep the position under review. Extended periods of inactivity are difficult to justify.

Claimants may also weaken their position by incurring disproportionate or unnecessary costs in response to the breach. Mitigation does not entitle a party to adopt an overly expensive solution and pass the cost on. Any remedial action must be reasonable, proportionate, and capable of justification.

A particularly damaging mistake is failing to document mitigation efforts. Courts expect evidence. Claimants who cannot demonstrate what steps were taken, when they were taken, and why certain decisions were made often face reductions in damages, even where their instincts were commercially sound.

There is also a persistent misconception that mitigation amounts to an admission of liability. It does not. Taking reasonable steps to limit loss strengthens a claimant’s position by demonstrating commercial sense and good faith. It is often the failure to mitigate, rather than the breach itself, that attracts judicial criticism.

Mitigation is closely scrutinised in breach of contract claims, particularly in commercial disputes. Early advice can help identify the steps required, the risks that may reasonably be taken, and how best to protect recoverable losses as the dispute develops.

If you are pursuing a breach of contract claim and want to avoid undermining your damages through mitigation errors, timely advice is essential. Contact us for a free consultation.