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How can mitigation affect my breach of contract damages?

A breach of contract occurs when one party to a contract fails in some way to fulfill its side of the agreement. New Jersey businesses may find themselves embroiled in breach of contract claims when their venders, partners and other business associates do not perform as they were expected to under the terms of their agreements. When a business wins a breach of contract lawsuit it is generally entitled to some damages for the losses it incurred.

However, actions taken or not taken on the part of the aggrieved party can affect how much that party is able to recover. For example, a court hearing a business's breach of contract claim may look into if and how the complaining party sought to mitigate its damages. Mitigating one's damages generally involves taking steps to lessen one's losses in the event of a contractual breach.

According to instructions provided to the courts of New Jersey, courts cannot award individuals damages in breach of contract claims if those damages could have been reasonably avoided. In other words, if certain damages were avoidable and others were unavoidable due to the actions of a breaching party, a harmed party may only be able to recover its unavoidable damages if it did not take reasonable steps to mitigate the apparently preventable losses.

Readers of this New Jersey business law blog should understand, however, that every breach of contract case is different. For this reason, how courts view reasonableness may differ depending upon the circumstances of each case. What is reasonable in one factual scenario may not be reasonable in another; as such, individuals with questions about the recovery of damages in breach of contract cases may wish to speak with their private counselors about how their cases may be viewed by the courts.

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