Question

Erte holds 1,000 pounds of perishable fruit in storage for Fresh Stuff Corporation. Fresh Stuff does not pay for the storage. Erte sells the fruit to Green Grocers, Inc. at a loss. This sale by Erte to Green Grocers represents:
A) a breach of contract
B) a mitigation of damages
C) rescission and restitution
D) specific performance

Answer 1

Answer: Mitigation of damages

Explanation: The concept of Mitigation of damages defines the action an individual or party who has suffered or incurred a loss arising from a breach of contract should take in other to lessen or mitigate the effect of the contract breach. This will lessen or reduce the loss incurred as a result of the breach caused by the other party. Once there is a breach of contract, Mitigation of damages becomes a duty on the party who has suffered a loss and should therefore, prevent increased 'avoidable loss' caused by the contract breach. Further losses incurred has a result of failure to mitigate damages won't be catered for by the party guilty of the breach of contract.