Although it is well settled that a party aggrieved by a breach of contract must take reasonable steps to mitigate or minimize its damages, see, e.g., Fair v. Red Lion Inn, 943 P.2d 431, 437 (Colo. 1997), it is a similarly well-settled principle of contract law that an aggrieved party cannot be required to accept offers from the breaching party if such offers are “conditioned on surrender by the injured party of his claim for breach,” Restatement (Second) of Contracts § 350 cmt. e (Am. Law. Inst. 1981) (concerning damage mitigation).[1] From this latter principle, it is widely accepted that the duty to mitigate does not oblige a party aggrieved by a breach of contract to accept an offer from the breaching party that would result in a relinquishment of the aggrieved party’s rights under the original contract. See, e.g., Publicker Chem. Corp. v. Belcher Oil Co., 792 F.2d 482, 488 (5th Cir. 1986) (quoting 5 A. Corbin, Corbin on Contracts § 1043 at 274 (2d ed. 1964)) (“One is not required to mitigate his losses by accepting an arrangement with the repudiator if that is made conditional on his surrender of his rights under the repudiated contract.”); Teradyne, Inc. v. Teledyne Indus., Inc., 676 F.2d 865, 870 (1st Cir. 1982) (“[T]here is no right to so-called mitigation of damages where the offer of a substitute contract is conditioned on surrender by the injured party of his claim for breach” because one “is not required to mitigate his losses by accepting an arrangement with the repudiator if that is made conditional on his surrender of his rights under the repudiated contract.” (internal quotation marks omitted)); Stanspec Corp. v. Jelco, Inc., 464 F.2d 1184, 1187 (10th Cir. 1972) (“A non-defaulting party need not accept a modified contract in mitigation of its damages when the modified offer includes abandonment of any right of action for a prior breach as a condition of acceptance.”); O’Dell v. Basabe, 810 P.2d 1082, 1102 (Idaho 1991) (“A plaintiff asserting wrongful discharge is not required to mitigate damages by accepting an alternative position which requires the employee to relinquish claims arising from the employer’s breach.”); cf. Pierce v. F.R. Tripler & Co., 955 F.2d 820, 826-27 (2d Cir. 1992) (holding evidence of a rejected settlement offer inadmissible to demonstrate a failure to mitigate, because such evidence is barred by plain language of FRE 408); Clevenger v. Bolingbrook Chevrolet, Inc., 401 F. Supp. 2d 878, 882 (N.D. Ill. 2005) (same).
¶10 In this jurisdiction, as elsewhere, both this court and the intermediate appellate court have recognized that it would simply be unreasonable and contrary to fundamental principles of contract law to mandate that a party aggrieved by a breach give up its rights under the contract to mitigate its damages. Despite holding, for example, that the duty to mitigate may, under certain circumstances, require a discharged employee to accept a former employer’s unconditional offer of reinstatement, we made clear in Red Lion Inn that accepting reinstatement would not be required if doing so would constitute “a disadvantageous renegotiation of the original contract or an abandonment of rights and remedies thereunder.” Red Lion Inn, 943 P.2d at 438-39 (emphasis added); see also Stone v. Satriana, 41 P.3d 705, 713 n.10 (Colo. 2002) (citing Gunn Infiniti v. O’Byrne, 996 S.W.2d 854, 855 (Tex. 1999)) (emphasizing that a “failure to settle can never amount to a failure to mitigate” because “inherent in settlement is a forfeiture of legal rights and such a forfeiture is not required.”); Westec Constr. Mgmt. Co. v. Postle Enters. I, Inc., 68 P.3d 529, 532 (Colo. App. 2002) (“[A] party need not accept, as mitigation, a modification offer that is conditioned on the abandonment of a right of action.”).
¶11 A party to a contract may, of course, make an offer for an accord which, if accepted and satisfied, would absolve it of its obligations under the original contract. See Restatement (Second) of Contracts § 281 (Am. Law Inst. 1981); 29 Richard A. Lord, Williston on Contracts § 73:27 (4th ed. 2002). Accord and satisfaction does not, however, implicate any requirement to avoid loss, or mitigate damages, but rather creates a new contract, capable through satisfaction of preventing a breach of the original contract. In any event, in the absence of impossibility, frustration of purpose, or some other reason not involving the fault of any party, for which a contract is no longer capable of being fulfilled, the other party is never obligated to accept an offer of an accord.