Contracts/Punitive damages

From wikilawschool.net. Wiki Law School does not provide legal advice. For educational purposes only.
< Contracts

Contracts Treatise
Table of Contents
Contracts Outline
Introduction and Definitions
Introduction
Definitions
Elements
Contract law in the United States
Contract formation
Parties
Offer
Acceptance
Intention to Bind
Formal requisites
Mailbox rule
Mirror image rule
Invitation to deal
Firm offer
Consideration
Consent
Implication-in-fact
Collateral contract
Modification
Merger
Uniform Commercial Code
Uniform Commercial Code
Course of dealing
Course of performance
UCC-1 financing statement
Uniform Commercial Code adoption
Defenses against formation
Lack of capacity
Duress
Undue influence
Illusory promise
Statute of frauds
Uncertainty
Non est factum
Contract interpretation
Governing law
Construction and Operation
Parol evidence rule
Contract of adhesion
Integration clause
Contra proferentem
Excuses for non-performance
Mistake
Misrepresentation
Frustration of purpose
Impossibility
Impracticability
Illegality
Unclean hands
Unconscionability
Accord and satisfaction
Rights of third parties
Privity of contract
Assignment
Delegation
Novation
Third-party beneficiary
Performance or Breach
Necessity of performance
Sufficiency of performance
Anticipatory repudiation
Cover
Exclusion clause
Efficient breach
Deviation
Fundamental breach
Termination
Termination
Rescission
Termination and rescission
Abrogation and rescission
Subsequent contract
Termination
Forfeiture
Remedies
Restitution
Specific performance
Liquidated damages
Punitive damages
Quasi-contractual obligations
Estoppel
Quantum meruit
Actions
Actions in General
Parties to Action
Pleading
Evidence
Questions of Law and Fact
Instructions
Trial and Judgment

Punitive damages are liquidated damages which exceed reasonable compensatory damages, making them invalid under common law. While liquidated damage clauses set a pre-agreed value on the expected loss to one party if the other party were to breach the contract, punitive damages go further and seek to penalise the breaching party beyond the reasonable losses from the breach. Many clauses which are found to be punitive are expressed as liquidated damages clauses but have been seen by courts as excessive and thus invalid.

The judicial approach to punitive 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 punitive 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.


Punitive damages are different from treble damages, which are generally set by statute for certain violations of competition law and related laws.

References[edit | edit source]