Think of a contract as a private set of laws that only apply to the two parties

Question

Think of a contract as a private set of laws that only apply to the two parties who signed it. Those two parties have determined and agreed to the subject, consideration, timing, duration, etc. for the contract. Generally, the court does not interfere with the parties’ agreement, except in certain circumstances (e.g. if the subject of the contract violates public policy). When a contract is breached and a lawsuit is filed, the court will generally award compensatory damages that make the non-breaching party “whole” again, as if the breach didn’t happen. The court rarely awards punitive damages that are designed to punish the breaching party.

Read the following article on damages in breach of contract cases.

http://jec.unm.edu/education/online-training/contract-law-tutorial/remedies-for-breach-of-contract

Read the following two articles/cases that include a discussion of punitive damages for breach of contract cases.

http://www.wlf.org/upload/110304PKB.pdf

https://isc.idaho.gov/opinions/41604.pdf (the Factual and Procedural Background section)

Do you think punitive damages should be awarded in breach of contract cases? If so, discuss why and under what circumstances. If not, discuss why not, even under circumstances including fraud or malice.

Explanation / Answer

Punitive damages should be awarded in cases of contract breach cases. This will not only deter the defendant from breaching a contract again but also will prevent others from doing a similar act again. The punitive damages must be very high in cases where the defendant's conduct was purposeful or lackadaisical. Usually only compensatory damages are awarded in case of contract breach. Punitive damages are awarded in very few cases like insurance bad faith violations by insurance companies, cases involving tort or contract crossover issues, cases involving egregious and intentional fraud, etc.

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