§ 70. Duty to limit your own loss
If the other party has committed a breach of contract (kontraktbrudd), you must take reasonable steps to limit your loss. If you just sit back while the loss grows, you must bear that part of the loss yourself. In addition, compensation (erstatning) can be reduced if it is unreasonably high compared with losses that normally arise in similar cases.
Machine-translated from Norwegian. The Norwegian text is the one that applies. Read the original in Norwegian.Norsk English العربية Polski Українська
The text of the law (unofficial translation)
(1) The party who invokes a breach of contract by the other party shall limit his loss by reasonable measures. If he neglects to do so, he must himself bear the corresponding part of the loss.
(2) Compensation may be reduced if it would be unreasonable for the liable party in view of the size of the loss compared with the loss that usually arises in similar cases, and the circumstances otherwise.
What does this mean?
You cannot just let the loss grow freely and then send the bill. The law requires you to take action.
Limiting the loss (first paragraph): If the other party is in breach of contract (mislighold), you must take reasonable steps to limit the damage. Examples:
- Make a replacement purchase (dekningskjøp)/resale (dekningssalg)
- Rent a temporary replacement
- Sell the goods to others if the buyer (kjøper) does not want them
- Stop work or use of resources connected to the agreement
If you neglect to do this, you must yourself bear the part of the loss you could have avoided.
Reduction of liability (second paragraph): Even if you have done everything right, the compensation can be reduced if it becomes unreasonably high. The question is whether the loss is unusually large compared with what is usual in similar cases. This is a safety valve — a release point where the liability becomes disproportionate.
Examples
Tom runs a small workshop. A supplier does not deliver parts on time. Tom has a customer waiting, but instead of making a replacement purchase, he lets the customer go. Lost profit: NOK 35,000. If Tom could have made a replacement purchase for NOK 8,000 and thereby kept the customer, he has neglected his duty to limit the loss. He cannot claim NOK 35,000 — he can claim what the loss would have been after reasonable steps (NOK 8,000 in extra cost for the replacement purchase).
Sara has a special business where a small delay from the supplier has extremely large consequences — compensation in the millions to her own customers. Under § 70 (2), the liability can be reduced if it is clear that the loss is unreasonably large compared with what is "usual" in similar cases. The seller (selger) could not be expected to know about Sara's special exposure. The assessment depends on the specific case.
Common mistakes
- Sitting passively and letting the loss grow — you are penalised for it
- Thinking the other party must cover everything no matter what — you have a duty yourself
- As the liable party: not trying to invoke § 70 when the other party has been slow
- Confusing "reasonable steps" with "every conceivable step"
What should you do?
When the other party has committed a breach of contract:
- Think about limiting the loss immediately: what can I do to reduce the loss?
- Document the steps — which alternatives you considered, what you chose and why
- Make replacement transactions quickly
- Be realistic about "reasonable" — you do not have to take impossible or very expensive steps
- Keep the other party informed
As the liable party:
- Invoke § 70 if the other party has been passive
- Invoke § 70 (2) if the compensation is unreasonably high
- § 27Compensation for delay
- § 40Compensation for a defect
- § 67Extent of compensation
- § 68Price difference on replacement transactions