The Studies On The Application Of Mitigation Rule In Contract Law

Damage compensation is the most important form of the Remedies for Breach ofContract，but this principle is an absolute defense which can be raised by thebreaching party, and so limit the damages by compensating the loss. Under the fieldof contract law, according to the principle of mitigate damages, the party relying onthe breach is required to undertake reasonable measures to mitigate loss. The partycannot sit idly while the losses resulting from the breach of contract accumulate andthen expect to be entitled to recover the losses that could have been avoided. Theprinciple of mitigate damages is generally recognized but is formulated in differentways in different country and is applied with varying degrees of emphasis. This thesisseeks to processes comparative study with the relevant clauses and legislation ofinternational conventions and foreign laws.This thesis is divided into six parts. In the first part introduces the definition ofthis principle and nature of mitigation obligation，compare the relevant stipulations ofdifferent laws. It cannot be considered a duty as such as it merely limits the damagesby compensating the loss to the extent that it could have been avoided by undertakingreasonable measures. Therefore, failure to undertake suitable mitigation measuresdoes not result in the aggrieved party’s liability to pay damages but rather inpreclusion of recovery of any loss that could have been prevented.The second part specifically demonstrates the relationship between Contributory Negligence and Rule of mitigate damages. Many codes do not explicitlyspeak of a duty to “mitigate” loss. Instead, statutory language that a party isresponsible for the damage it “causes” often provides a basis for concluding that someof the damage was caused by the plaintiff rather than the party in breach. They limitthe plaintiff’s recovery by principles akin to what other legal systems call contributorynegligence. Although duty to mitigate damages is different from contributorynegligence in application and legal effect, but its values are limited the scope ofrecoverable damages, and taking into account the competing interests of the parties.The third part introduces its legal basis, in theory circles，for the establishment ofthe rule of mitigation people mainly adopt doctrine of “good faith”,“fault”,“Proximate cause” and “Economic efficiency”.The forth part focus on the applicable elements of the principle and legal effectof mitigate damages. Firstly, it is required that one party breached contract and theother party known or should know. Then, she failed to take reasonable measures toprevent or mitigate damages. Most important is that this part of the losses related toact or omission of the aggrieved party. Duty to mitigate damages requires theaggrieved party to perform reasonable measures, but this is no definition of“reasonableness”. When ascertaining whether the measures were reasonable in thecircumstances, depend in Subjective and objective factors. This part list and specifysome mitigation measures such as termination、Substitute Transaction、 Contractmodification、avoid consequential damages of defects, regulate expenditure、Reminddanger and so on.The fifth part tries to resolve the conflict between specific performance andmitigate damages. In the frame of the Remedies for Breach of Contract, the systemof civil law makes specific performance preferential, but in the system of commonlaw is damage compensation primary form, the emphasis is that rule of mitigation isdiscussed in the framework of damage compensation. Although the non-breachingparty has right to choose to ask for performance, the right is limited.In the sixth part it is analyzed whether the principle of mitigate damages apply toanticipatory breach. Laws give the aggrieved party a right choose whether to recognize the default. If he choose to recognize the party’s default, then he shouldtake reasonable measures to mitigate damages; In the opposite situation, Whether thisrule apply is the key problem of this section.