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Remedies • Contract - Legal Remedies
REM#044
Legal Definition
No. Punitive damages are not allowed in contract, and where a defendant acts willfully, a plaintiff will often see to characterize their actions as fraud in tort in order to recover punitive damages.
Plain English Explanation
"It's not personal, it' just business" is a saying that pretty accurately describes contract damages. Even when a party may be a horrible human being, contract damages are focused on the outcome of the deal that was breached, not the sweet taste of revenge. In other words, though it may seem justified to add some additional damages onto a breach of contract claim in order to economically punish one of the parties, such punitive damages are not allowed. Instead, a plaintiff would need to seek punitive damages through a tort claim, like fraud.
Note, however, that punitive damages are different than liquidated damages (which you will learn about in another card). Liquidated damages may look like a punishment, but they are actually a calculated, pre-negotiated amount of damages.
Note, however, that punitive damages are different than liquidated damages (which you will learn about in another card). Liquidated damages may look like a punishment, but they are actually a calculated, pre-negotiated amount of damages.
Hypothetical
Hypo 1: Bob and Sam enter into a contract where Bob agrees to paint Sam's house. Bob intentionally uses cheap and harmful paint that damages Sam's walls. Sam sues Bob for the damage. Result: While Sam can recover damages to repaint his house and fix the damage, he cannot claim punitive damages based on the contract. However, if Sam can prove that Bob's actions were fraudulent or tortious, he might pursue punitive damages under tort law.
Hypo 2: Sam hires Bob's company to cater his wedding. Bob, out of spite for an old disagreement, intentionally ruins the food. The wedding is a disaster, and Sam sues Bob. Result: Sam can recover damages for the cost of the catering and perhaps other related damages. However, punitive damages are not available under the contract. If Sam can show Bob's actions were willfully harmful, he might characterize it as a tortious act to seek punitive damages.
Hypo 2: Sam hires Bob's company to cater his wedding. Bob, out of spite for an old disagreement, intentionally ruins the food. The wedding is a disaster, and Sam sues Bob. Result: Sam can recover damages for the cost of the catering and perhaps other related damages. However, punitive damages are not available under the contract. If Sam can show Bob's actions were willfully harmful, he might characterize it as a tortious act to seek punitive damages.
Visual Aids
Related Concepts
In assessing contract legal remedies, are nominal damages permitted?
In assessing contract legal remedies, what are compensatory damages?
In assessing contract legal remedies, what are consequential damages?
In assessing contract legal remedies, what are expectation damages?
In assessing contract legal remedies, what are incidental damages?
In assessing contract legal remedies, what are liquidated damages and when are they permissible?
What are legal remedies in contract?
What elements are required to prove legal remedies in contract?
What is the result of having a liquidated damages provision that is too excessive?
