Published by Manz, Vienna: 1986. Reproduced with their permission.

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2. The Duty to Mitigate Damages (Article 77)

Article 77 sentence 1 requires a party wishing to assert claims based on breach of contract to take reasonable measures to mitigate damages. A violation of this duty leads to a corresponding reduction in damages under Article 77 sentence 2. Article 77 corresponds to domestic provisions such as § 254(2) sentence 1 of the German Civil Code.[405]

The United States delegation proposed to supplement the duty to mitigate damages by permitting other remedies available to the injured party to be adapted or modified in the event losses were not mitigated.[406] The suggestion concerned cases where the seller produces the machine ordered despite an - unjustified - cancellation of the order and then demands full payment from the buyer.[407] However, the weakness in the interesting proposal was that the courts would have been given exceptional discretionary powers to modify specific performance or avoidance of the contract.[407a] It did not receive a majority.[408] [page 99]

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FOOTNOTES

* The author of this book participated at the Conference as a member of the delegation from the Federal Republic of Germany. The views expressed here are personal to the author and do not necessarily represent the position of the F.R.G. or its delegation.

405. But see Huber at 471 (a slightly differing view).

406. A/Conf. 97/C.1/L.228 (= O.R. 133).

407. See A/Conf. 97/C.1/SR.30 at 7-8 (= O.R. 396); see generally Honnold, Commentary § 419, which is the authoritative source for the reasons underlying this proposal.

407a. See also Ziegel, Remedial Provisions at 9-41.

408. In my opinion, the solution to the buyer's firm refusal to take delivery in the example given can be found with the help of the duty to mitigate damages in Article 77 sentence 1, which would require a timely avoidance of the contract by the seller under Article 72. This duty was breached by the seller. The obligation to pay the (full) purchase price would be the buyer's damages, recoverable for the seller's breach.

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