Fenwick Events cancels a block booking of 40 hotel rooms in breach of contract, three months before the event date. The hotel accepts the cancellation as ending the contract and claims damages. Although it has a waiting list of guests looking for rooms on that date, it turns them away, hoping to recover the full price from Fenwick. What is the effect of the hotel's conduct?

Correct answer: A) The hotel cannot recover loss it could have avoided by taking reasonable steps to relet the rooms

Explanation

An innocent party must take reasonable steps to mitigate its loss. It cannot recover for loss that reasonable mitigation would have avoided. The hotel can still recover the loss it could not have avoided, such as any rooms that would have stayed empty, so the claim does not fail entirely. It just cannot recover the avoidable part.