Why There Should Be a Duty to Mitigate Liquidated Damages Clauses
On May 15, 2008, the Massachusetts Supreme Judicial Court held that there is no duty for non-breaching parties to mitigate damages in the face of a liquidated damages clause.
In 2002, Paul Minihane entered into a ten-year license agreement with NPS, LLC for two Club seats at Gillette Stadium, the home of the New England Patriots football team.
This agreement included a liquidated damages provision that allowed NPS, LLC to accelerate the balance of monies owed under the contract in the event of default.
Despite attending all but one game in the 2002 season, Minihane paid only two payments under the agreement, and NPS, LLC subsequently brought suit to enforce the acceleration clause.
On appeal, the issues were confined to determining whether the liquidated damages clause was valid and the amount of the damages award.
Although both parties briefed the issue of mitigation on the assumption that non-breaching parties had such a duty,
Judicial Court “held” that there is no duty to mitigate damages in the face of a liquidated damages clause.