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Barry Adler_Contracts_Fall 2010

Barry Adler_Contracts_Fall 2010

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Published by: Christopher Sean Oglesby on Apr 11, 2011
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Mitigation: A P’s implied obligation [“mitigation obligation”] to reduce the damages incurred by
taking reasonable steps to prevent additional injury [“mitigation opportunity”].
oR.2d §350: Damages are not recoverable for loss that the injured party could have avoided
without undue risk, burden or humiliation
If you are able to cover but choose not to, damages are what they would have been if
promisee did cover (using price of substitute)

o: (1) The mitigation doctrine helps prevent waste by giving you an incentive to “cover”
with a substitute + (2) w/o it, customers might have to pay more in preemptive charges that
sellers would impose “It’s the price, stupid”

oMitigation Illustration

A agrees to paint B’s house for $100
•B values a painted house at $200 (due to wedding)
After A breaches, B does not try to “cover”
•There is a substitute painter willing to do the same job for $120
By the time that B sues A, no longer values at $200 (no more wedding)
B demands $100

•Personal π of ($200-$100)
B will not get the $100, but will only get the $20
•Had a “mitigation opportunity” and lost it
•The fact that he values it at $200 (or above $120) is irrelevant
oHis lost $80 is his own fault
•If he valued the house at less than $120, he shouldn’t cover
He would gain more by accepting the expectation damages


Barry Adler Contracts Fall 2010

Rockingham County v. Luten Bridge (1929) [The county, D, K’d w/ P for construction of a bridge •
After political struggle, muni. board repudiated project in the middle of construction • P cont’d to
build until complete

oHolding: After repudiation of performance by one party to a K, the other party can’t
continue to perform and the collect damages based on full performance
Stopping work in this case is not burdensome (via R.2d §350)
•Contra Parker
P could have claimed the work done up until time of breach in restitution

oLuten Bridge Hypo

Abel agrees to K w/ Baker to build wall for $200
Wall to be built in 2 sections, ea. $75
Baker builds first section ($75) Abel repudiates
Baker continues to build entire wall and sues Abel for $200
Crt: Baker gets the $75 from 1st

section and $50 π ($200-150)=$125

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