The rout in commodity prices continues to impact nations and
stocks across the globe. Already this year the price of oil has
dipped below US$30 a barrel, with a seemingly unrelenting
oversupply of crude and markets preparing for the return of Iran
post-sanctions. Sadly, falling prices often result in contract
re-negotiations or default, leading to claims and innocent parties
with goods on their hands and a difficult search for a willing
buyer prepared to pay a reasonable price.
Following a breach of contract, the innocent party has a duty to
mitigate the loss it has suffered. However, failure to mitigate
loss may prevent that party from recovering damages for avoidable
loss. A standard defence which the defaulting party often invokes
to reduce the damages payable is that the innocent party has failed
to act reasonably to mitigate its loss. The burden of proving a
failure to mitigate falls, however, on the defaulting party.
