One of the principles of mitigation of damages in contract is that, where a claimant takes steps which have the effect of mitigating the loss to him, consequent upon the defendant’s breach, the damages are reduced commensurately. The issue in The New Flamenco 1 was the relationship required between the steps and the breach, and the role of public policy, in determining which steps count. Though the case arose from a breach of contract, many of the authorities cited concern tort actions, and there is no suggestion that the principles are different, as between contract and tort.2

The New Flamenco was a cruise ship on a time charterparty, which was eventually extended (by oral agreement) until November 2009. The charterers disputed the validity of the oral extension, and indicated that they would redeliver the vessel in October 2007, the date that would have been applicable had there been no oral extension. The owners treated the charterers’ notice as an anticipatory breach, which they accepted as terminating the charterparty. They then sold the vessel, for a little under US$24 million.3