Punitive Damages for Breach of Contract
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What Are Punitive Damages in a Breach of Contract Claim?
Punitive damages are issued in order to punish the defendant, as well as to deter them from repeating the same type of conduct again in the future. These are additional damage amounts that are issued on top of the normal compensatory damages award for losses of profit. In some cases, the punitive damages can be very high, especially if the defendant’s conduct was particularly egregious.
In a breach of contract claim, punitive damages are generally not awarded at all. This is because the court is assuming that the parties are entering into the agreement with “open eyes,” meaning that they are fully aware of the risks involved in the contract. There are, however, limited circumstasnces in which a punitive damages award may result in a contracts action.
When Are Punitive Damages Issued in a Contract Claim?
Punitive damages can sometimes be issued in claims involving:
- Insurance bad faith violations
- Certain cases involving tort/contract crossover issues
- Some fraud cases
In most cases, the defendant’s conduct needs to be so “severe and egregious” that it can be considered more of a tort case than a contract issue. That is, the contract and tort issues are usually intertwined in cases resulting in punitive damages.
How Are Punitive Damages Measured?
The amount of punitive damages issued may depend on other damage awards, such as a compensatory damages award for losses. The amount may vary depending on the case, and also depending on state law. Some punitive damages limits may be set by statutory regulation.
Should I Hire a Lawyer for Help with Punitive Damages and Other Contract Issues?
Dealing with contract damages can be quite difficult at times. This becomes even more complex if punitive damages and tort issues are also involved. You may wish to hire a lawyer for representation on such issues as these. Your attorney can provide you with legal guidance on the matter, and can explain your rights under state and federal laws.
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Last Modified: 12-19-2013 12:10 PM PST
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