mitigation of damages
(law/insurance) A legal doctrine that charges a party who suffers contract damages with a duty to use reasonable diligence and ordinary care in attempting to minimize damages or avoid aggravating the injury. If a seller of oranges, for example, is entitled to prepayment before shipment and the buyer fails to pay, the seller should make a reasonable attempt to sell the oranges to another buyer before they spoil so as to mitigate the seller’s damages. The seller may then recover from the breaching buyer the difference between the contract price and the price at which the oranges were sold to the other buyer.
The concept also applies to insurance where the insured has the responsibility to minimize damages to an insured cargo shipment.