Offers to Mitigate

Seminar/Forum

Offers to Mitigate

Room 831, level 8
Law 106
185 Pelham Street

Map

More information

T: 0383449480

law-obligations@unimelb.edu.au

After a tort or breach of contract has occurred, the wrongdoer (or, occasionally, the victim) may propose a course of action that will eliminate or ameliorate the harm flowing from the wrong. The avoidable loss rule is routinely applied to assess the victim’s decision to reject, or to decline to make, such an offer. If the victim acted unreasonably, its damages are assessed on the counterfactual basis that it acted reasonably and did accept, or make, the offer.

Controversy has emerged over how this principle applies to a surprisingly simple situation. Suppose that the victim has suffered damage as a result of the breach of contract or tort, and that the damage can be eliminated by the wrongdoer if it is permitted to intervene. The wrongdoer offers to do this at no charge to the victim. Nonetheless, the victim prefers to pay for the services of a third party. Assume also that its choice to do so was unreasonable. What, then, can the victim recover? Two different answers emerge. One is that the victim receives nothing, because it would not have incurred that loss if it had allowed the wrongdoer to act. The other answer is that the victim can recover compensation, limited to what it would have cost the wrongdoer to carry out its offer.

My theory is that both answers may be right.

Presenter

  • Dr Wayne Courtney
    Dr Wayne Courtney, Associate Professor