Can Punitive Damages Be Awarded for Breach of Contract

Can Punitive Damages Be Awarded for Breach of Contract?

Punitive damages, also known as exemplary damages, are awarded with the intention of punishing the defendant for their wrongful conduct, as opposed to compensating the plaintiff for their losses. However, the question arises whether punitive damages can be awarded for breach of contract.

In general, damages awarded in a contract dispute are intended to compensate the plaintiff for their actual losses. These damages are referred to as “compensatory damages”, and they are intended to put the plaintiff in the position they would have been in had the contract been performed as agreed.

Punitive damages, on the other hand, are only awarded in cases where the defendant has engaged in particularly egregious conduct, such as fraud, malice, or willful misconduct. The purpose of punitive damages is to punish the defendant and deter them and others from engaging in similar conduct in the future.

While punitive damages are more commonly associated with tort law (i.e. personal injury claims), they can also be awarded in contract disputes in certain circumstances. However, the threshold for awarding punitive damages in contract cases is much higher than in tort cases.

In order to be eligible for punitive damages in a contract dispute, the plaintiff must prove that the defendant`s breach of contract was not only a violation of the agreement, but was also done with a “malicious intent” to harm the plaintiff. This can be a difficult standard to meet, as courts generally require clear evidence of intentional misconduct.

Furthermore, even if the plaintiff can prove malice or willful misconduct, the amount of punitive damages that can be awarded is often limited by state law. Many states have caps on punitive damages, meaning that even if the plaintiff proves malice or willful misconduct, they may not be able to recover the full amount of punitive damages they are seeking.

In conclusion, while punitive damages can be awarded in contract disputes, they are only available in cases where the defendant`s conduct was particularly egregious. Proving malice or willful misconduct can be difficult, and even if the plaintiff is successful, the amount of punitive damages that can be awarded may be limited by state law. Therefore, it is important for both parties to a contract to fulfill their obligations in good faith and avoid any conduct that could be seen as malicious or willful.