Ch.7 Mitigation of Losses

Subject(s):

Breach of contract — Mitigation of damages — Types of loss and damages — UN Sales Convention and damages — Obligations of the buyer

This chapter discusses the duty of a party relying on the breach of contract to mitigate the losses. Mitigation is a principle that is an obligation in the common law but not clearly defined in civil law. In arbitration practices, mitigation has become a general principle of international trade. The United Nations Convention on Contracts for the International Sale of Goods (CISG) has incorporated the doctrine of mitigation specifically into article 77, but the rule is also reflected in articles 85 and 86, which are concerned with the preservation of the goods after a breach. The idea behind article 77 is that the plaintiff cannot recover damages that he could have avoided but at the same time is obliged to return the goods in the similar or same state he received them.