This page uses so called "cookies" to improve its service (i.e. "tracking"). Learn more and opt out of tracking
I agree
transnational law transnational law (lex mercatoria or international business law) and "Duty to mitigate" 2016-03-01 13:58:16 https://www.trans-lex.org/img/logo_ball.png
Principle

No. VII.4 - Duty to mitigate

A party who relies on a breach of contract by the other party must take such measures as are reasonable in the circumstances to mitigate its loss, including loss of profit, resulting from the breach. If it fails to take such measures, the party in breach may claim a reduction in the damages in the amount at which the loss should have been mitigated.

Commentary
1 This Principle is one of the most firmly established rules of transnational commercial law. A party suffering damages from a breach of contract by the other party cannot simply lean back and let the damages mount up. In fact, it often happens that a party wants to shift all the responsibility for certain damages on its counterpart while the evidence reveals that it would have been possible for that party to minimize that damage had it acted without delay at the moment it received knowledge of the damage.

2 Which measures a party relying on a breach by the other party is required to take in order to mitigate its damages, e.g. with respect to the amount of time and financial resources to be invested in or the nature of such measures, must be determined by application of the standard of reasonableness.

3 Depending on the circumstances and on what is to be considered reasonable in a given case, the party relying on a breach of contract by the other side may be under an obligation to accept alternative performance or to agree to a renegotiation of the contract in order to mitigate its damages. However, the duty to mitigate its damages does not require that party to accept unreasonable risks or burdens.


Please cite as: "Commentary to Trans-Lex Principle , "

Catchwords:

mitigation, of, loss, mitigate
References
Arbitral Awards
Doctrine
International Legislation
Model Laws
Model Terms
National Legislation
Principles / Restatements
Contract Clauses
1. Lack of Conformity
Construction & O&M Contract
Immediate Measures to Avoid Damages
If, in case of a defect for which the Contractor is liable, (...) the risk of damage is such that immediate measures are required, and the Contractor is not able to remedy the defect forthwith, then the Purchaser shall take any measures which are required to avoid or limit damage to the Works. The Purchaser shall be entitled to compensation for the reasonable costs of such measures.
2001
2. Execution of Contract (General)
Sales & Purchase Contract
Additional Indemnification Provisions
(...) all Losses shall be net of any third-party insurance proceeds recovered in cash, net of directly related premium adjustments, by the Indemnified Party in connection with the facts giving rise to the right of indemnification, and (b) each party shall use reasonable efforts to mitigate any Losses for which that party seeks indemnification pursuant to this Article X (...)
2010
General Agreement to Indemnify
(...) Both parties shall mitigate their damages.
2011
Construction & O&M Contract
Limiting Damage
Each party shall forthwith inform the other when damage has occurred or there is risk of damage for which the other party is liable. The first named party shall also be obliged to take any measures which are necessary to prevent or limit such damage. If he fails to do so the other party shall be entitled to a reduction of damages.
2001
Asset Management Agreement
Force Majeure
(...) A party that claims that the performance of this Agreement is objectively impossible and impractical due to such event of force majeure shall take any reasonable measures to lessen the losses caused by such event of force majeure.
2003
3. Force Majeure
Construction & O&M Contract
Force Majeure
The Party or parties affected by the event of Force Majeure shall use reasonable efforts to mitigate the effects thereof upon its or their performance of the Contract and to fulfill its or their obligations under the Contract (...)
1997
4. Contractual Exclusion of Duty to Mitigate
Employment Contract
No Duty to Mitigate

The Employee shall not be required to mitigate the value of any benefits contemplated by this Agreement, nor shall any such benefits be reduced by any earnings or benefits that the Employee may receive from any other source. 


2012
Sales & Purchase Contract
Claims vis-a-vis the Sellers
Any claim vis-a-vis any of the Sellers under or in connection with this Agreement are excluded, if and to the extent (...) the claim or the amount of the claim does result from a failure of the Purchaser or any Company of the Group to mitigate the damage pursuant to Section 254 of the German Civil Code after the Closing Date.
2004
Mortgage Financing Contract
No Duty to Mitigate

Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any such payment be reduced by any earnings that Executive may receive from any other source. 


2004
Change of Control Agreement
No Duty to Mitigate

Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any such payment be reduced by any earnings that Executive may receive from any other source. 


2012
A project of CENTRAL, University of Cologne.