1.Within the field of contractual damages there are several rules and principles that limit the main rule of full compensation.This article will focus on one of these principles, namely the duty to mitigate loss, and to what extent the duty might be affected by intentional breaches of contract. It is argued, contrary to the result reached by the Supreme Court in a recent judgement, that the conduct of the breaching party should be relevant in deciding whether the aggrieved party has complied with its duty to mitigate.s. 464
2.Virtually all European legal systems recognize, if not the term then at least the concept of, the duty to mitigate loss.The duty entails that an aggrieved party, being in principle entitled to compensation in damages for the loss resulting from a breach of contract, cannot recover damages to the extent that the aggrieved party could have reduced the loss by taking reasonable measures. These measures may be positive in the sense that the aggrieved party must take active steps to reduce the loss, for example entering into a substitute transaction. Alternatively, the duty may be negative, in the sense that the aggrieved party may be required to abstain from actions to prevent further loss, for example continuing performance upon the wrongful termination of the contract by the other party.s. 465
3.It bears mentioning that Swedish law, like many other domestic legal systems, adopts the distinction made between contributory negligence and the duty to mitigate loss. There are indeed grounds for distinguishing between these two related concepts, even though there is a clear connection between them. Both concepts involve the aggrieved party’s duty to act reasonably. As recently made clear by the Supreme Court (NJA 2017 s. 9, see further about this case below), the distinction between contributory negligence and the duty to mitigate loss does not prohibit the simultaneous application of both principles in certain situations.s. 465
4.The duty to mitigate loss can be derived from e.g. the Sales of Goods Act (SGA), which stipulates that the aggrieved party must take reasonable steps to mitigate its loss. If the party fails to do so, it must bear “the corresponding part of the loss itself” (i.e. the loss that reasonably could have been avoided). It is generally accepted that the duty to mitigate loss is a general principle of Swedish contract law, also applicable to other types of contracts than sales of goods.s. 466
5.To determine which measures that are reasonable, the reference point is the conduct of a reasonable person. It is often expressed that the aggrieved party should act “in an economically sensible or rational fashion and in the same manner as the party would have acted if it could not expect to receive compensation for the loss.”Whereas this basic principle seems to remain undisputed and might provide some guidance, the details have become more and more controversial.s. 466