The Duty to Mitigate in Tort Law

Abstract

The duty to mitigate is a well-established principle in contract law, preventing injured parties from recovering losses that could reasonably have been avoided. By contrast, the economic analysis of the duty to mitigate in tort law has drawn far less attention. This paper investigates the role of the duty to mitigate in tort, with particular emphasis on the verifiability of mitigation costs. The analysis considers both strict liability and negligence regimes. In each framework, we explore how a mitigation rule affects the injurer’s ex ante incentives to take preventive measures that reduce the likelihood of an accident, as well as the victim’s ex post incentives to minimize the resulting harm. We show that when mitigation costs are perfectly verifiable, imposing a duty to mitigate always results in optimal incentives. However, if mitigation costs are not perfectly verifiable, introducing such a duty can reduce overall welfare – particularly under a negligence regime.