Duty to mitigate and intentional breaches of contract

Abstract

Intentional breaches of contract are not as uncommon as one might imagine. Given the fact that they reflect the non-performing party’s wilful disregard of the aggrieved party’s rights under the contract, in stark conflict with the fundamental principle of pacta sunt servanda, many legal systems as well as international instruments have set forth special rules and principles that puts the aggrieved party in a more favourable position than what otherwise would be the case. It is considered that a normal application of contract terms or optional legislation would lead to objectionable and morally unfair results in cases of intentional wrongdoings. The particular effects of intentional breaches are often related to, and have their greatest significance for, damages claims. In the present article, the author examines the interface between intentional misconduct and the duty to mitigate loss.