CRITERIA FOR ASSESSING THE REASONABLENESS OF THE CREDITOR’S CONDUCT IN MITIGATING LOSSES

Abstract

The article analyzes the normative model of loss mitigation as enshrined in Part 2 of Article 616 
of the Civil Code of Ukraine, as well as in acts of international and European unification of contract law, in 
particular the United Nations Convention on Contracts for the International Sale of Goods, the UNIDROIT 
Principles of International Commercial Contracts, the Principles of European Contract Law, and the Principles, 
Definitions and Model Rules of European Private Law: Draft Common Frame of Reference.
The functional similarity of the loss mitigation models embodied in the analyzed instruments 
is substantiated. This similarity lies in the adjustment of the scope of compensation with due regard to 
the conduct of the injured party after the breach of the obligation.
It is demonstrated that the obligation to mitigate losses does not contradict the principle of full 
compensation, but rather serves as its functional specification, excluding from compensation that part 
of the damage which resulted from the unreasonable or passive conduct of the creditor.
The internal connection between the principle of reasonableness and the obligation to minimize losses 
is substantiated, whereby reasonableness serves as a standard for evaluating behavior, and the obligation 
to minimize losses constitutes its practical implementation. It is noted that the absence of direct normative 
enshrinement of the reasonableness criterion in the Civil Code of Ukraine, in the context of the creditor’s actions 
to minimize their own losses, complicates the formation of a standard of proper creditor behavior.
The lack of a unified approach by Ukrainian courts in applying the provisions of Part 2 of Article 616 
of the Civil Code of Ukraine and the disregard for the principle of reasonableness in assessing the creditor’s actions 
to minimize their own losses are demonstrated.
The advisability of enshrining the requirement of reasonableness of the creditor’s actions in 
Part 2 of Article 616 of the Civil Code of Ukraine is substantiated in order to increase legal certainty and bring 
national regulation closer to European standards.
The main criteria for reasonable creditor behavior are formulated as follows: compliance with the usual 
standards of civil commerce and business practice, the availability of measures to a specific creditor under 
specific circumstances, and the independence of the assessment of reasonableness from the actual 
effectiveness of the measures taken.