The duty to mitigate damages clause requires a party who has suffered a loss or injury to take reasonable steps to minimize the financial impact of that loss. Failure to mitigate can reduce the amount of compensation recoverable from the other party responsible for the breach or harm.
F.
Landlord Default: The following is hereby added to the Lease as Section 29:
"In the event Landlord fails or neglects to perform, meet, or observe any of Landlord's obligations under this Lease, and such failure or neglect shall continue for a period of thirty (30) days after written notice from Tenant, then Tenant, at any time thereafter by written notice to Landlord, shall have the right to either (a) cure the default and deduct the expense or cost from the rent amount due Landlord under the terms of this Lease; (b) withhold rent, pending Landlord's cure of the default; (c) terminate the Lease; or (d) pursue any of its remedies at law or in equity. Notwithstanding anything to the contrary, the Tenant shall have a duty to mitigate damages."
The Company's severance obligations are subject to your duty to mitigate damages by seeking other employment provided, however, that you shall not be required to accept a position of lesser importance or of substantially different character than the position held with the Company immediately prior to the effective date of termination or in a location outside of the Chicago metropolitan area. To the extent that you shall earn compensation during the Severance Period (without regard to when such compensation is paid), the severance payments of Base Salary to be made by the Company shall be correspondingly reduced.
LIMITATION ON DAMAGES
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES’ LIABILITY FOR DAMAGES IS LIMITED TO DIRECT, ACTUAL DAMAGES ONLY (WHICH INCLUDE ANY AMOUNTS DETERMINED UNDER ARTICLE 19) AND NEITHER PARTY SHALL BE LIABLE FOR SPECIFIC PERFORMANCE, LOST PROFITS OR OTHER BUSINESS INTERRUPTION DAMAGES, OR SPECIAL, CONSEQUENTIAL, INCIDENTAL, PUNITIVE, EXEMPLARY OR INDIRECT DAMAGES, IN TORT, CONTRACT OR OTHERWISE, OF ANY KIND, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE PERFORMANCE, THE SUSPENSION OF PERFORMANCE, THE FAILURE TO PERFORM, OR THE TERMINATION OF THIS AGREEMENT; PROVIDED, HOWEVER, THAT, SUCH LIMITATION SHALL NOT APPLY WITH RESPECT TO (I) ANY THIRD PARTY CLAIM FOR WHICH INDEMNIFICATION IS AVAILABLE UNDER THIS AGREEMENT OR (II) ANY BREACH OF ARTICLE 18.4(C) OR ARTICLE 24. EACH PARTY ACKNOWLEDGES THE DUTY TO MITIGATE DAMAGES HEREUNDER.
2.1 No Duty to Mitigate Damages. Executive's benefits under this Agreement shall be considered severance pay in consideration of Executive's past service and Executive's continued service from the date of this Agreement, and Executive's entitlement thereto shall neither be governed by any duty to mitigate Executive's damages by seeking further employment nor offset by any compensation which Executive may receive from future employment.
•The Company’s severance obligations are subject to your duty to mitigate damages by seeking other employment provided, however, that you shall not be required to accept a position of lesser importance or of substantially different character than the position held with the Company immediately prior to the effective date of termination or in a location outside of the Chicago metropolitan area. To the extent that you shall earn compensation during the Severance Period (without regard to when such compensation is paid), the severance payments of Base Salary to be made by the Company shall be correspondingly reduced.
3.
No Duty to Mitigate Damages. The Employee's benefits under this Agreement shall be considered severance pay in consideration of his past service and his continued service from the date of this Agreement, and his entitlement thereto shall neither be governed by any duty to mitigate his damages by seeking further employment nor offset by any compensation which she may receive from future employment.
(d) In the event Executive’s employment is terminated pursuant to Sections 8(a)(v) or (vi) hereof prior to the expiration of the Term, Executive shall be entitled to receive, as his sole and exclusive remedy, (i) severance pay equal to the Annual Salary Executive would have received through the expiration of the Term, (ii) any earned but unpaid Acquisition Bonus, and (iii) an amount equal to the Annual Bonus Executive would have received hereunder pursuant to Section 3(b) hereof, prorated to the date of such termination of employment. Executive shall have no duty to mitigate damages by seeking alternative employment following any such termination.
The Executive shall have no duty to mitigate damages in connection with his termination by Employer without "cause." However, it is understood and agreed that, upon receiving a lump sum payment of any amounts which may become due under this paragraph (b), no further amounts shall be owed to the Executive and the Employer shall have no further obligation to provide any further benefits to the Executive, except as expressly set forth herein. It is also understood and agreed that, notwithstanding any provisions of this paragraph (b) and in the event the Executive obtains new employment during any period that the Employer is obligated to provide hospital, health, medical and life insurance benefits hereunder and such new employment provides for hospital, health, medical and life insurance benefits in a manner substantially similar to the benefits to be provided by Employer hereunder, Employer may permanently terminate the duplicative benefits it is obligated to provide hereunder.
10. Limitations of Liability. Except as otherwise explicitly provided herein and except for Company Recipient's payment obligations for fees, truces and related charges under any Agreement, the aggregate liability of each party for any actual damages arising under or in any way relating to all Agreements entered into by the parties pursuant to this Master Agreement, whether such liability arises in contract, tort or any other legal theory, shall be limited to the greater of (i) two hundred fifty thousand dollars ($250,000) and (ii) the total fees and costs payable by Company Recipient under all such Agreements for the two (2) year period prior to the date on which the first such claim for damages arose hereunder. The aforementioned limitations of liability will not apply to claims associated with (i) the infringement of a third party's intellectual property by the Product/Special Services; (ii) either party's willful misconduct or gross negligence; (iii) Company Recipient's misuse (including, but not limited any material violation of the use restrictions) of the Product, the Special Services or any Morningstar Mark. Additionally, neither party will be liable for the consequential, punitive, special, incidental, indirect. exemplary, collateral, special, or other, similar forms of damages, including, but not limited to, Joss of income, profit or savings, of the other party or its affiliates regardless of the form of action or the theory of recovery, even if such party has been advised of the possibility of such damages. Each party has a duty to mitigate damages that would otherwise be recoverable hereunder by taking appropriate and reasonable actions to reduce or limit the amount of such damages.
8.6 Unless otherwise stipulated in this Contract, the provisions of the German Civil Code on the law of damages (sections 249 et seq. BGB), including the duty to mitigate damages pursuant to section 254 BGB, shall apply.
Executive shall have no duty to mitigate damages under this Section 6(b) during the applicable severance period and, in the event Executive shall subsequently receive income from providing Executive’s services to any person or entity, including self employment income, or otherwise, then no such income shall in any manner offset or otherwise reduce the payment obligations of the Company hereunder.
The term “Duty to mitigate damages” refers to a legal obligation imposed on a party who has suffered a loss or injury to take reasonable steps to minimize the impact of that loss. This principle prevents the injured party from recovering damages that could have been avoided through reasonable efforts.
When should I use Duty to Mitigate Damages?
You should invoke the duty to mitigate damages in situations where a breach of contract or a wrongful act has occurred, leading to some form of loss. Courts often consider whether the injured party made reasonable efforts to reduce their losses when awarding damages. This duty applies in various areas of law, including contract law, tort law, and employment disputes.
Example
If a tenant breaks their lease prematurely, the landlord must attempt to re-rent the property to mitigate the damages caused by the breach.
How do I write Duty to Mitigate Damages?
When addressing the duty to mitigate damages in legal documents, contracts, or correspondence, it’s important to articulate the expectation clearly. Here’s a template you might use:
Duty to Mitigate Damages
Both parties acknowledge the duty to mitigate damages in the event of a breach or other actionable events. Each party agrees to take reasonable steps to >minimize and reduce any potential losses or damages arising from such incidents.
Credibly documenting efforts to mitigate damages is essential. Maintaining records, communications, and steps taken to minimize losses can prove invaluable in a legal context.
Which contracts typically contain Duty to Mitigate Damages?
The duty to mitigate damages is a common clause in various types of contracts, including:
Commercial Contracts: To manage the risk of losses in business transactions.
Lease Agreements: To outline landlord and tenant responsibilities in the event of early termination or breaches.
Employment Contracts: To instruct employees on minimizing losses in cases of wrongful termination.
Service Agreements: To specify the obligations of service providers and recipients in mitigating service failures or breaches.
Example
Lease Agreement Clause: The Tenant agrees to make reasonable efforts to re-rent the premises if the lease is terminated early. The Tenant’s failure to do so will be considered a breach of the duty to mitigate damages.
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