The following Dispute Resolution practice note Produced in partnership with Zainab Hodgson and Kavidha Clare of CMS provides comprehensive and up to date legal information covering:
Even where causation and remoteness have been established (see Practice Note: Causation and remoteness in contractual breach claims) in relation to loss, any recoverable damages can be affected if the claimant has failed to mitigate their loss. That is, the innocent party cannot recover damages for any loss which they could have avoided but failed to avoid through unreasonable action or inaction. Central to the issue of mitigation is the question of what steps were reasonable or unreasonable for the claimant to take?
The rule on mitigation comprises three distinct components:
the innocent party must take all reasonable steps to mitigate their loss. The innocent party cannot recover damages for any loss, which they could have avoided but failed to avoid through unreasonable action or inaction
where the innocent party takes reasonable steps to mitigate their loss, they can recover any losses incurred in taking such steps
where the innocent party takes steps to mitigate their loss and these steps are successful, the defaulting party is entitled to the benefit, which arises as a result of the innocent party's action
Note: Leggatt J in Thai Airlines v KI Holdings stated that while distinguishing the three components may sometimes be useful, it is important not to lose sight of their underlying unity. The
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