What does it mean to “mitigate damages” in a breach of contract? What is a failure to mitigate damages in a breach of contract and why is it important for the victim of a contract take actions after the breach to reduce the resulting financial impact?
The Requirement to Mitigate Damages in San Diego and Southern California
What happens when one party fails to fulfill their obligations under a business contract? This is known as a breach of contract and usually results in a measurable financial impact to the victim of the contract breach. The law refers to these financial losses as “damages.” The primary legal remedy in a breach of contract case is an award for various types of damages.
When a party suffers financial damages from a breach of contract in California, they are required to take reasonable and timely actions to limit their losses. This is described in the law as the requirement to mitigate damages, and the failure to take quick and prudent action to reduce or eliminate losses can actually harm the victim of the contract breach. The party responsible for the breach will use the failure to mitigate damages as a valid defense in a breach of contract lawsuit in San Diego and throughout California. The failure to mitigate damages in a breach of contract case can reduce or eliminate altogether the ability of the victim of the breach to recover their losses from the party responsible for the breach.
Defending Allegations of Breach of Contract
Defending allegations of breach of contract requires legal experience and skill. The experienced contract litigation attorneys at the Watkins Firm have successfully managed these cases for more than four decades here in San Diego and Southern California. Business litigation (and specifically breach of contract) is all about the damages. When a breach of contract occurs and notification has been provided, the party who will not receive the benefit of the bargain is required to take timely, immediate action to reduce or eliminate the financial impact this will have upon their business. This includes notifying customers associated with the potential breach, looking for other sources of supply, and taking immediate proactive measures that most prudent business people would take. If the company fails to do so, the Judge should instruct the jury that “A plaintiff cannot be compensated for damages which he could have avoided by reasonable effort or expenditures.”
The attorneys at the Watkins Firm will also investigate any sources of “contributory negligence” or actions that the “injured” party took or did not take that either resulted in the breach of contract itself, or the accumulation of damages that could have been reasonably avoided.
The Failure to Mitigate Damages in a Breach of Contract is a Costly but Fairly Common Mistake
The failure to mitigate damages in a breach of contract is a costly but fairly common mistake. What actions are the victim of a contract breach required to take in order to meet the obligation to mitigate damages?
If you are the victim of a breach of contract or have received notice that your company has allegedly breached a contract with another business, 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.
Learn about our unique approach to litigation, and how our strategies reduce the expense of this process while resolving the dispute as quickly as possible. We will help you to take steps to strengthen your position, while working to resolve or settle the breach of contract dispute through effective negotiations and other alternative resolution options.
