With regard to the doctrine of mitigation, which of the following is FALSE?

• A. The nonbreaching party must take reasonable steps to reduce the damages from the breach.
• B. A failure to mitigate damages prevents the nonbreaching party from recovering any damages.
• C. The burden of proving a failure to mitigate damages rests on the breaching party.
• D. The mitigation efforts required to prevent loss are subject to a reasonableness standard applied in light of the original contractual duties.

Answer: (B)

Mitigation means the nonbreaching party must take reasonable steps to limit damages after a breach. They aren’t required to take extraordinary measures, but they must act reasonably in light of the contract and its duties. If they fail to mitigate, damages are reduced by the amount that could have been avoided, but they aren’t automatically barred from recovering everything. They can still recover losses that could not have been avoided through reasonable mitigation.

The false statement claims that a failure to mitigate prevents recovery of any damages. In reality, the duty to mitigate trims the damages, not the entire recovery. The other statements align with the doctrine: the nonbreaching party must mitigate; the breaching party bears the burden to show whether mitigation was failed; and the standard for mitigation is a reasonableness standard informed by the original contractual duties. For example, if a seller breaches and can resell at a lower price, the damages are the difference between contract price and the amount actually recovered, not a total loss of damages.