Mitigation and Remoteness in Contract: Policy and Principle

Abstract

This paper explores the policy and operation of the doctrine of mitigation in contract law. It assesses how it fits with contract more broadly and other aspects of contract damages (remoteness and date of assessment). The main policy behind mitigation is to incentivise self-help on the part of the party best placed to avoid loss. In practice, the assessment of when it becomes reasonable to mitigate mostly depends upon the subject matter of the contract, and the liquidity of the market. Courts must know what the available market was in order to calculate the relevant counterfactual inquiry. In a highly liquid market for goods, mitigation is presumed in the basic measure of loss for sale of goo..