Availability of Punitive Damages in Contract Disputes
Litigation By Harvey Binnall PLLC - 2019/04/30 at 09:07pm
Experienced Commercial Litigation Lawyer in Alexandria, VA
Punitive damages are uncommon, and particularly so in contract disputes. Still, it is worth understanding the basics, as a legitimate punitive damages claim could significantly increase the damage total. If the defendant believes that you have a reasonable chance of securing punitive damages in a contract dispute, they may be more willing to negotiate a settlement compromise that is favorable to your interests.
Let’s take a closer look.
Understanding the Basics of Punitive Damages
Unlike compensatory damages (i.e., damages that cover the financial losses from a contract dispute or other action), punitive damages are not meant to compensate the plaintiff for their various losses. Instead, punitive damages are meant to “punish” the defendant and therefore serve as a tool for discouraging negative behaviors in society.
Punitive damages accomplish the goal of deterrence by increasing the damages reward to a substantial degree. In fact, punitive damages are calculated by multiplying the compensatory damages total — they may account for as much as nine times the compensatory damages total. As such, a contract dispute worth $200,000 could be worth as much as $1.8 million if the court awards punitive damages.
Punitive Damages May Be Recoverable in a Limited Subset of Contract Disputes
Generally speaking, regardless of jurisdiction, punitive damages are not available in pure breach of contract actions (even if the breach of contract at-issue is willful, wanton, or malicious in nature). Courts may only choose to award punitive damages in contract disputes where the defendant has engaged in tortious misconduct. This limits punitive damages to a subset of contract disputes.
Put more specifically, when the defendant’s tortious conduct — such as misrepresentation or fraud — has been outrageous, malicious, wanton, reckless, or in willful disregard of the plaintiff’s rights, then the breach of contract will assume the “character of a willful tort” and punitive damages may be awarded.
For example, suppose that you are engaged in a contract to obtain the services of the defendant for renovating your restaurant. The defendant misrepresented their experience and training, however, and they were not qualified to actually perform the renovation. If the defendant willfully engaged in such misrepresentation, then the court may choose to award punitive damages.
Contact Harvey & Binnall, PLLC for Guidance
Harvey & Binnall, PLLC is a boutique litigation firm whose attorneys have decades of experience representing individuals and commercial entities in Virginia, Maryland, and the Washington D.C. metro region.
We are committed to securing the maximum available damages in a contract dispute — unlike many of our competitors, we invest the time and resources necessary to comprehensively litigate a claim from beginning-to-end. When punitive damages are made possible under the circumstances, we put efforts towards persuading the court to award such damages.