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Payzu Ltd v. Saunders [1919] 2 K.B. 581

Facts:

D agreed to sell silk to P from January to April. Silk was delivered. Cheque from P to D was delayed. D said they wouldn’t sell to P anymore unless they pay in cash for each order. D brought claim for difference between the market price and contract price

Ratio:

In assessing damages for failure to perform, the court will take into account whatever the plaintiff has or ought to have done to diminish his losses (they must act reasonably in the circumstances = mitigate losses)

Analysis:

The plaintiffs were in position to pay cash, and instead of accepting the bona fide offer, they decided to incur a substantial loss which a reasonable person who have avoided

Comments:

NOTE: The principle that you have to accept the other parties offer in order to mitigate does not apply in employment cases - this was a commercial contract case


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