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Mitigation of damages: Comparison between the provisions of the CISG (Art. 77) and the counterpart provisions of the Principles of European Contract Law (Art. 9:505)

By B. Zeller

Abstract

Mitigation is a principle that is an obligation in the common law, but is not clearly defined in civil law. In arbitration practices mitigation has become a general principle of international trade, and Mustill refers to the principle as “[to] constitute the lex mercatoria in its present form.” He went further by noting that mitigation is merely treated as obvious.\ud \ud The CISG has incorporated the doctrine of mitigation specifically into Article 77, but the rule is also reflected in Articles 85 and 86, which are concerned with the preservation of the goods after a breach. The idea behind Article 77 is that the plaintiff cannot recover damages or losses that he should have avoided. This principle is also accepted in the Principles of European Contract Law (PECL) in Article 9:505.\ud \ud The first obvious difference between the PECL and the CISG is that Article 77 clearly states that losses include loss of profit, whereas the PECL are silent on this aspect. It can be assumed that the loss of profit is included in the PECL, as the official commentary to Article 9:501, specifically illustration 4, explains that loss of profit is included. Furthermore, Article 9:502 PECL stipulates that a party has the right to recover losses and “the gain of which it has been deprived.” In addition, the CISG can be used as an analogical tool that would confirm that losses, as explained in the PECL, include the loss of profits and therefore are identical to the CISG; hence, mitigation follows the same pattern of losses in the counterpart provisions

Publisher: Cambridge University Press
Year: 2009
OAI identifier: oai:researchrepository.murdoch.edu.au:26742
Provided by: Research Repository
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