Duty to Mitigate Damages After a Contract Breach
Quick answer: An injured party must take reasonable steps to reduce avoidable loss after learning of a breach. The mitigation rule in Civil Code Article 2203 does not require extraordinary expense or unreasonable risk, but damages may be reduced when the claimant’s own failure to act aggravated the loss.
Governing rule
The duty to mitigate sits within the Civil Code’s rules on actual damages, one of the types of damages. Civil Code Article 2203 requires the injured party to exercise the diligence of a good father of a family to minimize damages resulting from the act or omission in question.
Decision table
| Situation | Practical effect |
|---|---|
| Obtain a reasonable replacement supplier | Often supports mitigation |
| Leave goods exposed to preventable deterioration | May increase avoidable loss |
| Accept a commercially reasonable substitute | May limit continuing damages |
| Take a dangerous or disproportionate step | Generally not required |
Evidence and next steps
- Give prompt notice of the breach.
- Prevent avoidable physical or financial deterioration.
- Seek reasonable replacement performance or alternatives.
- Keep quotations, communications, and decision records.
- Track the loss before and after mitigation measures.
Mitigation affects the recoverable amount in an actual-damages claim.
Frequently asked questions
Must the injured party accept any substitute?
No. The alternative should be reasonable and materially responsive to the promised performance.
Who proves failure to mitigate?
The parties should preserve evidence; allocation and effect depend on the claim, defenses, and facts.
Mitigation affects the amount of recoverable loss, not the initial choice of contract remedy. If the breach is substantial, review Article 1191 resolution before calculating damages.
Primary legal source
Civil Code of the Philippines, Republic Act No. 386. Court outcomes depend on the pleaded cause of action, evidence, contract terms, procedural rules, and controlling jurisprudence.