What are the primary reasons to mitigate the damages in a breach of contract if you are the victim of the breach?  We often hear this type of question from clients: “I am not the party who caused the breach of contract, so why is our company required to mitigate the damages caused by the breach?  What actions are we required to take by law to protect our financial and contractual interests?”

Federal and State laws require you, as the party who has suffered as a result of a breach of contract, to take “reasonable, prudent and timely” action(s) to mitigate the associated losses or damages.  The failure to do so will limit the amount of damages you are able to recover in negotiations or through business litigation downstream.  Take immediate action to begin to find alternative vendors to provide the goods or services you had contracted for.  Contacting the Watkins Firm to discuss our services, and our negotiations on your behalf also serve as an effort to mitigate your losses.

Mitigating the damages begins with answering the question: “What does the breach of contract mean to my business, and what should I do to limit my financial exposure and to reduce the impact on my company and our customers?”  There are a variety of reasons to mitigate the damages in a breach of contract, and to work to resolve the breach.  In many cases, we are able to get the other party’s attention and establish the seriousness of their breach, while maintaining a positive working relationship so that a productive and successful solution can be negotiated and implemented.

Pro-Tip: “Well, mitigating the damages is an obligation under the law. A lot of people get hurt or damaged by someone who breaches a contract. And then they go with this attitude that, ‘well, since they breached the contract, (the other party) owes us,’ and they don’t try to mitigate their damages. Mitigating the damages means doing things that would make the victim of the breach suffer as much from the breach of contract or other types of causes of action. And what happens in the law is a judge or a jury will hear what you did and you’ll think you’re gonna get $300,000 in trial, but they’ll decide that you failed to perform your obligation to mitigate the damages, to do everything you could to lessen the amount of damages you suffered.

The primary reasons to mitigate the damages in a breach of contract is to make sure you retain the right to obtain a judgment and compensation, and to preserve the maximum amount available to you under the law.  

If it’s a minor breach, that means that you still have a contract. You still have an agreement and you can demand performance, or you can demand that you have to give less performance on the other side, but yet the contract isn’t completely breached and it’s not over. A material breach gives you more remedies, remedies that are important and may sound minor today. But there’s been many a situation where having a material breach gives the party who was breached or damaged the right to rescind the contract or the right to specific performance, and forced the performance of the contract. All of these things have amazing consequences, if you look at factual situations in breach of contract law.” – Dan Watkins, Founding Partner

If you are a party to business contract, and the other party has failed to pay or notified you in some manner of their failure to perform on the contract you have to mitigate the damages in a breach of contract to protect your own legal and financial interests.  We invite you to review the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.  We will help you to identify the appropriate actions required to mitigate your losses, and work with you to accomplish your goals for the situation, while resolving it in the most timely and cost-effective manner possible.