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Editing Contracts/Punitive damages
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''' | '''Penal damages''' are best seen as quantitatively excessive [[liquidated damages]] and are invalid under the [[common law]]. While liquidated damages are a priori calculations of expectation loss under the contract, penal damages go further and seek to penalise a party in some way for [[Breach of contract|breach]] of a clause above and beyond the loss suffered by the innocent party as a result of this breach. Many clauses which are found to be penal are expressed as liquidated damages clauses but are seen by courts as excessive and thus invalid. | ||
The judicial approach to | The judicial approach to penal damages is conceptually important as it is one of the few examples of judicial [[paternalism]] in contract law. Even if two parties genuinely and without coercion wish to consent to a contract which includes a penal clause, they are unable to. So, for example, a person wishing to give up smoking cannot contract with a third party to be fined $100 each time they smoke as this figure does not represent the expectation loss of the contract. | ||
==As distinguished from other types of damages== | |||
Penal damages are to be distinguished from '''[[punitive damages]]''', which are awarded in certain types of [[tort]] actions for actions which caused harm to the plaintiff. Penal damages are also different from '''[[treble damages]]''', which are generally set by [[statute]] for certain violations [[competition law]] and related laws. | |||
[[Category:Contract law]] | |||
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