Explain three limitations on monetary damages


To accomplish the basic purposes of contract remedies, the law imposes on monetary damages the limitations of foreseeability, certainty, and mitigation. The limitation of foreseeability is intended to ensure that damages can be taken into account at the time of contracting. The test of foreseeable damages is objective. Damages are not recoverable for loss beyond an amount that the injured party can establish with reasonable certainty. This limitation is intended to ensure that damages are compensatory and not speculative. The third limitation, mitigation of damages, is the doctrine that the injured party may not recover damages for loss that he could have avoided with reasonable effort and without undue risk, burden, or humiliation.

Business

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