One of the most easily forgotten legal points when an action is begun to recover losses is that there is a general duty on the person suffering the loss to ‘mitigate’ (reduce as far as is reasonably possible) their losses. Failure to do so can limit the amount of compensation awarded.
When an equipment hire and sales company supplied a customer with a forklift truck that was too big to work in the available space, the customer rejected it and refused the supplier’s offer (which was made in general, not detailed, terms) to modify it so that it would be suitable.
The purchase had been made on hire purchase (HP) and, when the truck was found to be unsuitable, the purchaser ceased paying the instalments due under the HP agreement. When the HP company sought payment of the arrears, a settlement was reached and the customer then claimed against the supplier.
The purchaser claimed that the supplier had misrepresented the forklift as fit for the required purpose and that it had relied on that misrepresentation. In its defence, the supplier argued that the failure of the purchaser to accept its offer to modify the forklift so that it would be fit for purpose represented a failure to mitigate its loss.
The case went as far as the Court of Appeal, which ruled that the forklift truck supplier’s offer to modify the vehicle was ‘vague, unparticularised and unconvincing’. The supplier’s initial attempts at solving the problem were criticised as lacking professionalism. The purchaser had not, therefore, failed to mitigate its loss.
In this case, had the supplier made a detailed proposal, it would have stood a much better chance of persuading the Court. It shows how important it can be to get your negotiating position right from the start of any dispute.
If you fear you may be about to become embroiled in a contractual or other dispute, contact Dean Parnell on 0121 698 2200. email d.parnell@sydneymitchell.co.uk or fill in our online enquiry form.
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