The principle of mitigation, which applies to claims in both contract and tort, provides that a claimant cannot recover damages for loss which could have been avoided by taking reasonable steps.
By way of a practical example, an employee dismissed in breach of contract cannot refuse to search for alternative employment and claim lost earnings for that period as damages. The claim would be limited to the difference between the salary which they would have received from the defendant and the salary which they could have obtained in alternative employment, had a reasonable attempt been made to obtain it.
There are two limbs to the principle:
- The injured party must take reasonable steps to minimise loss.
- The injured party must not take unreasonable steps to increase loss.
A claimant is only required to act reasonably in the circumstances and the standard of reasonableness is not high. Although the burden of proving a failure to act reasonably is on the defendant, the claimant should always take steps to mitigate in order to adduce evidence of their reasonable attempts to mitigate.
Even in circumstances where mitigation does not reduce the loss, the claimant can recover the costs of their failed but reasonable attempt to mitigate.