Do you have to mitigate losses in a breach of contract in order to preserve the right to recover the financial damages associated with the breach? What steps do you need to take in order to mitigate your losses?  What happens if you fail to reduce the losses associated with a breach of contract?

Business lawsuits and disputes are resolved in compensation based upon the financial “damages” associated with your case.  Damages are the key to any business dispute and are the financial value of the loss from the contract breach or the additional costs required to find another solution. Quite simply, you have to mitigate losses in a breach of contract situation in order to preserve your position and the legal remedies available to you under our breach of contract laws.  The failure to take timely, prudent action to mitigate potential and actual losses will limit or eliminate altogether your legal right to recover damages from the breaching party.

There are many forms of damages in a San Diego business lawsuit.  “Compensatory Damages” repay you for the losses you received as a result of not receiving the benefit of the bargain due to the contract breach.  “Liquidated Damages” are often specified within business contracts and represent an agreed upon value for the failure to complete a contract.  When the Court finds fraud or other illegal or untoward activities are present it may award “punitive damages” as a form of punishment for the fraudulent actions.  “Restitution” allows the party who did not cause the breach to ensure the breaching party does not benefit as a result of breaching the original agreement.  For example, receiving goods and then not paying for them.

Pro-Tip: “The primary remedy for a breach of contract is damages. That’s the term a lot of people don’t understand. What are damages? This is an important question! When I advise my clients, I tell them the most important item in litigation is not whether you are liable or they’re liable, or somebody breached. I say the three most important things in a lawsuit are: damages damages damages.

And I say, it just like, you know, location, location, location, because it’s that important in the type of damages you can obtain are so varied that if you focus on whether you’ve been damaged under the law, there will be a statute or a case that says you are entitled to those damages. So if you track it backwards from I lost a hundred thousand dollars in this deal and how you lost it on those facts and what you did lose, you’ll probably find 99% of the time, a statute or a law or a case or something that gives you a remedy, a right to those damages and how you can collect.

Damages are what the law can afford you in a civil case.  In a civil matter, since your contract and your agreement was mostly about money, then you get money back. And the only time you don’t just get money is when it’s a case where a law will afford you an injunctive or provisional remedy, which is for unique types of damages and unusual circumstances.

Mastering the damages in the cases so important for lots of reasons.  First of all, when you are in a lawsuit over a breach of contract or anything, you are investing money to get money. So if you don’t know how much you’re fighting for, how can you know how much you should spend?

Secondly, if you master the damages, if you can prove what the damage to you is, if you obtain and collect all the evidence about the damages, even before you worry about why you were damaged or what the law was breached, you can understand the case, the way a litigator understand understands it. You can help your lawyer and in the long run, you’ll be more successful in your case, by thinking about how you were damaged for, and then working it way back to who breached what and who broke what law.” – Dan Watkins, Founding Partner

If you are the victim of a breach you are required to mitigate losses in a breach of contract in order to pursue damages from the party who caused the breach.  We invite you to review our podcast Episode 5 – Breach of Contract as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.   Ask about our decades of successful experience in these cases and our unique approach to resolving business disputes.