mitigation of damages

a doctrine in contract law that requires a damaged party to take reasonable actions to reduce the effect of the offending party's breach. The law, through the mitigation of damages doctrine, places an obligation on the damaged party. Without such a policy an injured party might be encouraged to maximize the dollar amount of damages in anticipation of legal action. This would work against the interest of justice.

Fiona's niece, Sheila, is to be married and contracts with a local caterer to provide food and service for her reception. A contract is signed, specifying a menu, the number of servers and other important details. A deposit is given to the caterer. Twelve days before the event, Sheila gets word through her wedding coordinator that the caterer has backed out of the deal and will not perform as specified by the contract. At that point Sheila is obligated under the mitigation of damages doctrine to lessen the effect of the caterer's breach if reasonably possible. Fiona and the coordinator step in to find a replacement caterer who can provide a comparable meal and service. The fee for the new caterer, however, is 20% more than the original caterer's price. A new contract is signed. On the day of the wedding the replacement caterer provides the meal as expected. Sheila may now pursue the original caterer in court to collect the difference in cost having mitigated her damages.