Exemplary damages

The basic principles of contract →Go uptown A candidate for exemplary damages, yesterday. Formation: capacity and authority · representation · misrepresentation · offer · acceptance · consideration · intention to create legal relations · agreement to agree · privity of contract oral vs written contract · principal · agent Interpretation and change: governing law · mistake · implied term · amendment · assignment · novation Performance: force majeure · promise · waiver · warranty · covenant · sovereign immunity · illegality · severability · good faith · commercially reasonable manner · commercial imperative · indemnity · guarantee Breach: breach · repudiation · causation · remoteness of damage · direct loss · consequential loss · foreseeability · damages · contractual negligence · process agent Remedies: damages · adequacy of damages ·equitable remedies · injunction · specific performance · limited recourse · rescission · estoppel · concurrent liability Not contracts: Restitution — quasi-contract — quasi-agency Index: Click ᐅ to expand: Contract Tort Restitution Tell me more Sign up for our newsletter — or just get in touch: for ½ a weekly 🍺 you get to consult JC. Ask about it here.

Exemplary damages
/ɪgˈzɛmpləri ˈdæmɪʤɪz/ (n.)
[Only for civil wrongs not governed by a contract]

In which a court becomes unusually censorious, and departs from its usual role of merely compensating victims of civil wrongdoing, and proactively punishes a wrongdoer for its naughtiness, independently of any compensable loss it has caused. Not, generally, available as a remedy for breach of contract, even in the US though there (and, frankly, in the UK also) one commits a separate tort whilst otherwise performing in a contract, you may still be liable for exemplary damages on the tort. If, in the service of your employer, you navigate your punt so outrageously and to the detriment of a third party not being your employer or one of its customers, that the court feels you should be punished, look out.

Not to be confused with aggravated damages, which address unusual distress that he may have caused the victim, and therefore are still compensatory in nature, or consequential loss, that speculative “oh-yeah-Jimmy-Hill” style damages for profits you might have made elsewhere had you not been busy being breached at under this contract.

“Exemplary”, or “punitive” damages — punishing a defendant for the contumelious or high-handed way it wronged a plaintiff — isn’t “contumelious” a great word? — goes beyond the philosophical aims of a contractual remedy — to give a fellow what he bargained for — and so are not available as damages for breach of contract. As Lord Atkinson put it, in the great case of Addis v Gramophone:

“In many other cases of breach of contract there may be circumstances of malice, fraud, defamation, or violence, which would sustain an action of tort as an alternative remedy to an action for breach of contract. If one should select the former mode of redress, he may, no doubt, recover exemplary damages, or what is sometimes styled vindictive damages; but if he should choose to seek redress in the form of an action for breach of contract, he lets in all the consequences of that form of action: Thorpe v Thorpe (1832) 3B.&Ad. 580. One of these consequences is, I think, this: that he is to be paid adequate compensation in money for the loss of that which he would have received had his contract been kept, and no more.”

“Vindictive damages”. I mean did you ever hear such a super phrase? How did it not catch on?

The Law Commission, considering the topic some ninety-odd years later, felt the same way: “we recommend that punitive damages should not be available unless the defendant has committed a tort, an equitable wrong, or a civil wrong that arises under a statute, and his conduct showed a ‘deliberate and outrageous disregard of the plaintiff’s rights’. We also recommend that punitive damages should never be available for breach of contract.”

See also

• Consequential loss