The purpose of damages in breach of contract lawsuits is to put the injured party in the financial position they would have enjoyed had no breach occurred. Typically, the damages (i.e. compensation for the breach) are limited to an amount of loss that was reasonably foreseeable by the breaching party. Often, one’s party’s failure to perform its obligations can result in severe hardship to the innocent party.
Imagine that you’ve contracted with a company to conduct extensive repairs on your roof. The roof is in such disrepair that you need someone to come immediately to prevent weather from destroying the home’s interior. You exhaust most of your savings to pay “Company X” which promised to come the following week and finish the job within two days. Your check clears, but Company X doesn’t show up on the scheduled date. In fact, you can’t get anyone at the company to return your calls. A few days later, a storm causes water to flood your second floor, and you don’t have enough money to hire anyone else. This hypothetical brings into question whether the general rules for contract damages can fairly compensate the injured party.
In contrast to cases predicated on negligence, punitive damages, i.e., damages intended to punish the wrongdoer, are generally not permitted in contract cases. For instance, in Ohio, appellate courts have deliberated whether a willful breach of contract can give rise to punitive damages, and the prevailing view is that punitive damages are not permitted unless the breach of contract is accompanied by fraud or another independent tort.
Courts across the country place a high threshold on actions constituting fraud. The homeowner in our hypothetical would likely have to submit proof that Company X never intended to fulfill their end of the bargain and/or purposefully misled her. In rare circumstances and upon the required proof, courts may be willing to impose punitive or non-contractual damages to deter the perpetrator from engaging in the same conduct in the future and to properly compensate the plaintiff.
If you’ve been harmed by someone’s bad business practices, our attorneys would be happy to speak with you.
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