Punitive Damages from a Breach of Contract
When a contract is breached, there are many losses to the company that may not be so apparent at first. It is often incalculable the types of damages that could occur such as missed opportunities, lost business, as well as other financial losses that harm the bottom line. Some contracts have specific values for a breach and these are estimates called “liquidated damages.” However, since the breach has not occurred at the time of drafting the contract, the estimate hardly ever shows the full value of all the financial losses. Hence, companies seek compensation in addition to the liquidated damages found in the contract. These punitive damages are sought because they are not specifically outlined and it is also an act to punish the defendant for their misconduct and prevent such behavior from recurring in the future.
When seeking punitive damages in California, the breach of contract must also be accompanied by an intentional tort committed by the defendant. An intentional tort is a wrongful act done on purpose and is considered a civil offense. Some instances would be a prank that led to someone being injured, false imprisonment, or domestic violence. In cases regarding business, more common torts would be fraud, conversion, or intentional interference. If the defendant just used poor judgment or negligence to breach the contract, that alone may not justify receiving punitive damages.
An example of intentional interference of a contractual relationship would be if your company made a contract to supply your customer with fresh coffee for their staff every week. In order to get out of the contract, the customer might find the coffee vendor and convince them to stop selling you the coffee. This is an intentional tort. In your breach of contract claim, this tort could be proven and make your case eligible for punitive damages as well as the losses that were outlined in the contract.
As always, speak to an attorney regarding your case. There may be overlooked information and strategies that a qualified lawyer would be able to aid with.